Redraw vs Offset: What first-home buyers should know.

Spring is one of the busiest times in the property market. If you’re planning to buy your first home, you’re likely seeing more listings, and more competition. That’s why being prepared matters, not just with your budget, but with understanding your loan options.

Beyond interest rates, there are features in your home loan that can help you save money over time. Two of the most common are redraw facilities and offset accounts. They both help reduce the interest you pay, but they work in slightly different ways.

What is a redraw facility?

A redraw facility lets you make extra repayments on your home loan and then access those extra funds later if you need them.

Example:
If your minimum repayment is $2,000 and you pay $2,500, the extra $500 goes toward your loan. This lowers your loan balance and reduces the interest charged. If needed, you can request to withdraw that extra amount later.

Pros:

• Helps you pay down your loan faster
• Reduces interest over time
• Keeps extra funds available if needed

Things to consider:

• Some lenders limit how much or how often you can withdraw
• Withdrawals may not be instant
• Fees or conditions may apply

We can help you find lenders with flexible redraw options that suit your financial goals.

What is an offset account?

An offset account is a transaction account linked to your home loan. It works like a regular bank account—you can have your salary paid in, use a debit card, and pay bills from it.

The money in the account is “offset” against your loan balance. So, if your loan is $500,000 and you have $20,000 in your offset account, you only pay interest on $480,000.

Pros:

• Reduces interest while keeping your money accessible
• Can be used for everyday banking
• May help you pay off your loan sooner

Things to consider:

• Some lenders charge higher fees for offset accounts
• Not all offset accounts offer full offset—some only reduce part of the loan balance

Our team at FinancePath can help you compare lenders to find an offset account that matches your spending and saving habits.

Choosing the right loan features.

If you’re just starting to explore your home loan options, it’s okay not to have all the answers. The most important thing is choosing a loan that fits how you want to manage your money.

Some loans include redraw or offset features as part of the package. Others may charge more or offer fewer benefits. That’s where FinancePath comes in to help you make sense of your choices and avoid paying more than you need to.

Planning to buy this spring?

Now is the perfect time to get organised. If you’re looking to buy in the coming months and want to understand how loan features like redraw and offset accounts can help, let’s chat.

Speak to one of our mortgage advisers today and get expert guidance tailored to your goals. We’ll help you get pre-approval sorted and make sure you’re ready when the right property comes along.