Thinking about buying your first home this spring? You’re in good company – it’s one of the busiest seasons in the property market, with plenty of listings and lots of competition. The best way to get ahead is by being prepared.

When comparing home loans, most buyers focus on interest rates. But features like redraw facilities and offset accounts can make a big difference to how much interest you pay and how quickly you can pay off your loan. While they both work to reduce interest, they do so in different ways.

Here’s a simple guide to help you understand each option.

What is a Redraw Facility?

A redraw facility lets you make extra repayments on your home loan – then access those funds later if needed.

For example, if your minimum repayment is $2,000 but you pay $2,500, that extra $500 reduces your loan balance and lowers the interest charged. If circumstances change, you may be able to withdraw the extra amount you’ve paid in.

Benefits: 

• Helps you pay off your loan faster with extra repayments 
• Reduces the total interest paid 
• Keeps your funds available if you need them 

Things to keep in mind: 

• Some lenders set limits on how much or how often you can redraw 
• Withdrawals may not be instant 
• Fees or conditions may apply 

What is an Offset Account?

An offset account works like a regular transaction account but is linked to your home loan. You can deposit your salary, pay bills, or use a debit card just as you would with any bank account. 

The difference is that your account balance offsets your loan balance. For example, if you owe $500,000 and have $20,000 in your offset account, you’ll only pay interest on $480,000. 

Benefits: 

• Saves you interest while keeping money accessible 
• Can be used for everyday banking 
• May help shorten your loan term 

Things to keep in mind: 

• Offset accounts sometimes come with higher fees 
• Some only offset part of your loan balance rather than the full amount 

Which Option is Right for You?

Every lender structures these features differently. Some include them as part of a loan package, while others charge extra or apply restrictions. The best choice depends on how you prefer to manage your money – whether you’d rather make extra repayments or keep funds flowing through your everyday account. 

As your Broker, I can walk you through the differences and help you decide which option suits your lifestyle and goals. 

Ready to Buy This Spring?

Spring is the perfect time to get your finances in order. If you’d like to learn more about how redraw and offset accounts could work for you – or if you’re ready to get pre-approval so you can act quickly when the right property comes up – let’s talk.