OFFSET ACCOUNTS AND REDRAW FACILITIES
Both Offset and Redraw are available on certain types of mortgage loans. They both have their merits; it comes down to what best suits your client’s needs and objectives.
The main difference with an Offset is that your funds are kept in a separate account that is linked to your home loan. Redraw is a feature which allows you to make extra repayments on your home loan and then you can take them out again if you need to. Refer to the Lender for full terms and conditions on these features. The below is provided as a guide only and not advice.
Offset Account
Offset funds are client’s funds and are not diminished by regular repayments as with a redraw feature
Offset account works just like an everyday bank account
You nominate the loan account that you want to link the Offset to
Offset accounts are not available across all products, refer to the Lender for full
terms and conditions
100% Offset means the funds you have in the offset account, offset against the
balance of your home loan, therefore reducing the amount of interest charged on your home loan.
Partial Offset means a reduced interest rate charged for the portion of your home loan equal to the balance in your linked transaction account.
Unlimited access to your funds
Loans with Offset accounts usually come with a slightly higher interest rate
Redraw Feature
Redraw is the available balance that comes from making extra repayments on your loan
Funds in your redraw facility that have been created by the extra payments that you have made, reduce the interest amount on your home loan
Redraw is a feature attached to most home loan products it is NOT a separate
account
Redraw is always at the discretion of the Lender and Lenders may have a minimum redraw amount
Disclaimer: This information is current as at the time of each QRG publication. It is a general information guide only.