Redraw vs. offset

If your home loan offers the option for both a redraw facility and an offset account, you may be wondering if it’s better to make extra repayments into your home loan to build redraw or add as much money into your linked offset account as possible.

The answer will depend on your financial goals and personal needs. 

Both a redraw facility and an offset account allow you to use your savings to reduce the interest paid on your loan, which may allow you to pay off your home loan sooner. Every cent available in either redraw or your offset account will reduce the same amount of interest you’re charged.

Side-by-side comparison

There are some differences in how you use and access money that we explain below to help you decide what suits your needs.

  Redraw facility Offset account
What is it?
Redraw facility
A redraw facility is a feature of your variable rate home loan.
Offset account
An offset account is a transaction account linked to your variable rate home loan. 
How it can save you money
Redraw facility
Having funds available in redraw reduces the balance of your home loan that interest is calculated and charged on. 
Offset account

With an offset account, interest is charged on the difference between your home loan balance minus the amount in your linked offset account.

The more money you have in the offset account, the less interest you pay on your home loan.

How to access funds
Redraw facility

Transfer extra funds from your home loan into a savings or transaction account in your name at no extra cost or fees.

You can access redraw through online banking, by chatting to one of our banking specialists in branch or giving us a call on 13 22 65.

Offset account
Access your money in the same ways that you would use any transaction account. For example, through using a debit card to make purchases or online banking to transfer funds to anyone.
Withdrawal limits
Redraw facility

You can redraw as little as $500 or up to $150,000 per transaction, as often as you like.

You cannot access the entire amount of funds you’re ahead by as we will always withhold your next scheduled repayment.*

Offset account
You can withdraw on any funds up to the entire balance of your offset account.

*There are other circumstances when we may cancel or suspend your access to redraw. It's important to view all these circumstances so you're aware of how your redraw can be cancelled or suspended. Read the full list in our important information section.

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Terms and Conditions

The information contained in this article is intended to be of a general nature only. It has been prepared without taking into account any person’s objectives, financial situation or needs. Before acting on this information, NAB recommends that you consider whether it is appropriate for your circumstances. NAB recommends that you seek independent legal, financial and taxation advice before acting on any information in this article.