With interest rates continuing to shift, many Australians are taking a closer look at their home loan structure. Reviewing how your loan is set up can be a simple but effective way to better manage repayments and reduce long-term costs, depending on your individual circumstances.
Two features often considered are offset accounts and redraw facilities. While both can help reduce the interest you pay, they work in different ways and suit different strategies.
What is an Offset Account?
An offset account is a transaction or savings account linked to your home loan. The balance in this account is offset against your loan when interest is calculated.
For example, if your loan is $500,000 and you have $50,000 in your offset account, you’ll only be charged interest on $450,000.
Rather than earning interest, the funds in your offset work to reduce the interest payable on your loan.
Key benefits
- Reduce interest costs: The higher your offset balance, the less interest you’ll pay.
- Everyday flexibility: Your money remains accessible for daily use.
- Potential tax advantages: Interest savings are generally not considered taxable income (though this depends on your individual circumstances).
- Pay off your loan sooner: Lower interest means more of your repayments go towards the principal.
- Useful for investors: Helps preserve the tax deductibility of interest if funds are withdrawn.
Things to consider
- Offset accounts may come with annual package fees
- Some loans with offsets may have slightly higher interest rates
- Typically only available with variable-rate loans
What is a Redraw Facility?
A redraw facility allows you to make extra repayments on your home loan and access those additional funds later if needed.
Using the same example, if you pay an extra $50,000 into your loan, your balance reduces to $450,000, meaning less interest is charged.
Key benefits
- Lower interest payable: Extra repayments directly reduce your loan balance
- Faster loan repayment: Consistent extra payments can shorten your loan term
- Repayment flexibility: Some lenders allow reduced or paused repayments if you’re ahead
- Encourages disciplined saving: Funds are less accessible than an offset account
Things to consider
- Access restrictions: Some lenders limit how and when you can redraw
- Tax implications for investors: Using redraw for personal expenses may affect interest deductibility
- Usually only available with variable-rate loans
Why More Australians Are Reviewing Their Loans
In 2025, more than 640,000 Australians refinanced their home loans, a 20% increase on the previous year.
With ongoing rate changes, many borrowers are exploring options to:
- Secure a more competitive rate
- Access features like offset accounts or redraw facilities
- Better align their loan structure with their financial goals
Which Option is Right for You?
There’s no one-size-fits-all answer. The right structure depends on your goals, cash flow, and whether the property is owner-occupied or an investment.
That’s where tailored approach makes a difference.
At Ironbark Group, our approach is to understand your full financial picture, so you can make informed, confident decisions about your lending strategy, both now and into the future.
Speak to Ironbark Group
If you’re reviewing your home loan or considering refinancing, we’re here to help.
Our team can guide you through your options and structure a solution that supports your long-term goals.
Get in touch with Ironbark Group today to start the conversation.