skip to log on skip to main content
VoiceOver users please use the tab key when navigating expanded menus

Article | 5 minute read

What's the difference between redraw and offset?

The information on this page does not apply to ANZ Plus products

Redraw facilities and offset accounts have many similarities. But there are some important differences too.

First up, make sure you read our articles on redraw and offset accounts if haven’t done so already. Now that you’ve done that, let’s unpack how and when to use an offset account or redraw facility.

The similarities

Alright, let’s break this down. Both offset accounts and redraw facilities:

  • can help reduce the amount of interest you pay on your home loan
  • can help you pay off your loan earlier
  • are generally available on most standard variable loans.

The differences

An offset account is a separate deposit account. You can have your employer deposit your salary into it and you can transfer money in from other accounts. If you want, you can use your offset account for everyday spending like groceries and bills by using a debit card.

By contrast, a redraw facility is not a separate account but a feature attached to your loan. It allows you to draw back additional payments (the amount above your scheduled payments) you have made on the loan. A redraw facility may not be as flexible as an offset account. For example, you may not have the option to redraw money from an ATM or transact using a debit card. Some lenders may set minimum redraw amounts.

There may be different tax implications with using your redraw feature and offset account if you decide to rent out your home in the future.  If you decide to rent out your home as an investment property, the interest charged on the loan may be tax deductible. But you may not be able to claim any portion of the loan you have redrawn from your redraw facility for non-investment purposes like a holiday or a private car.

On the other hand, withdrawing amounts from your offset account won’t affect the tax deductibility of interest charged on your loan. If there is a possibility that your first home could one day become an investment property, we suggest you seek financial advice on the best way to reduce interest on your loan with using a redraw or offset account.

Remember that everyone has their own spending and saving habits. What works for one person may not work for everyone. Here are a couple of scenarios that illustrate how offset and redraw accounts could work for different types of people.

Scenario One: Mike has renovation plans

Mike has just bought his first home – and it’s a renovator’s delight. He needs to save $12,000 to fix the place up and has chosen to do this by putting away $200 a month over five years. Rather than putting it in a savings account, he’d decided to reduce the amount of interest he pays on his home loan.

But here’s the thing: Mike doesn’t want the money to be easily accessible – otherwise he’ll be tempted to spend it. For this reason, he decides to put the money into his home loan as extra repayments. This means he pays an extra $200 above the minimum he’s required to repay each month.

By doing this, Mike is paying off more of the home loan principal, which means he’s reducing the amount of interest he pays over the course of the five years. If the need arises, he has the option to ‘redraw’ the $12,000 to pay for his planned renovations.

Scenario Two: April is a good money manager

April has always been good with her money. She always pays off her credit card on time every month to avoid paying interest.

Having just taken out a home loan, she is keen to make it work as hard as possible for her. So she decides to use the interest-free period on her credit card to maximise the value of her offset account.

She tells her employer to pay her salary into her offset account each fortnight. Meanwhile, she uses her credit card to pay for her daily living expenses. By paying it off each month, she avoids credit card interest charges.

By taking advantage of the interest-free period on her credit card, April can let her salary sit in her offset account for longer. In doing so, she reduces the amount of interest she pays on her home loan.

Both offset and redraw can work together

Many people use both offset accounts and redraw facilities. For example, you might consider making an extra repayment into your home loan each month. Plus, you might choose to use an offset account as your transaction account where you salary is deposited.

Both your offset account and redraw facility may help to reduce the amount of interest you pay on your home loan. They could also help you pay it off earlier.

Decisions, decisions…

Weighing up the best way to manage your finances and home loan depends on a range of factors. Everyone’s circumstances are different.

It’s a good idea to talk to your lender about options for managing your loan repayments. But it’s also a good idea to talk to a trusted financial advisor on how to best manage your finances.

To sum up 

  • Offset accounts are like everyday transaction accounts, giving you easy access to your money.
  • Redraw facilities let you access extra repayments that you have made on your home loan.
  • Both can help reduce the amount of interest you pay on your home loan.
  • How you use them depends on your circumstances and how you prefer to manage your finances.
  • There may be different tax implications for offset and redraw if you decide to rent out your home.

Extra tips and tools

Home owner tips and guides

Get practical tips to help you in your property journey, whether you're just starting out, ready to buy, or trying to sell. 

Get tips now


Download free ANZ Property Profile Reports

Get a price range estimatedisclaimerof how much a property could sell for, with options to estimate equitydisclaimerif you already own property. 

Get a report


Connect with our Home Loan Specialists or apply

Quick Start home loan application

Get started in just 5 minutes. Apply for pre-approvaldisclaimer, a new home loan or to refinance or top up your existing ANZ home loan.

Apply online now


Request a call back

Leave your details 


Connect with a mobile lender disclaimer

Find a mobile lender


Visit a branch or ANZ Home Centre

Find your nearest location


Call us

1800 100 641

Monday - Friday
8am to 8pm (AEST)


You can also chat to an ANZ accredited broker for help with your home buying, investing or refinancing needs.


You might also be interested in


Fixed vs variable home loans: which one may be right for you?

5 minute read

Can't decide on a type of home loan? ANZ gives you a guide to choosing between a fixed or variable home loan to suit your needs.



How extra repayments could help you pay off your loan sooner

3 minute read

There are some simple strategies that could reduce your loan period and save you thousands of dollars in interest.



Understand the home loan application process

6 minute read

This guide outlines the home loan application process to help you understand the steps to applying for a home loan with ANZ.


The information on this page does not take into account your personal needs and financial circumstances and you should consider whether it is appropriate for you and read the relevant terms and conditionsProduct Disclosure Statement and the ANZ Financial Services Guide (PDF) before acquiring any product. 

Applications for credit subject to approval. Terms and conditions available on application. Fees and charges apply. Australian credit licence number 234527.

A property price range estimate is an estimate only. It is based on certain available information and is not a valuation of a property or guarantee of its market value or future sale price. Price ranges and predictions may change daily and the actual sale price (if the property is sold) may be different.


Equity in your home is calculated as the difference between the value of your home and the amount you have left to pay on your home loan at the time the calculation is performed. Estimated equity ranges are estimates only and may not be available for all properties. They are based on certain available information and dependent on the current loan amount data that you input into your ANZ Property Profile Report request form, calculated against the price range estimate. Estimated equity ranges are not confirmation as to the equity you may have in a property or a guarantee of the equity available should a property be sold.


ANZ may provide pre-approval (also known as approval in principle or conditional approval) to eligible customers who apply for an ANZ home loan and complete an application form and satisfy any other applicable requirements. Pre-approval is an approval for a loan subject to conditions being met, including that security is satisfactory to ANZ. Australian Credit Licence Number 234527.


ANZ Mobile Lenders operate as an independently operated ANZ Mortgage Solutions franchise of Australia and New Zealand Banking Group Limited (ANZ) ABN 11 005 357 522. Australian Credit Licence Number 234527.