With interest rates where they are, more Australians are starting to ask a smart question:
“Is my home loan set up the right way?”
Because it’s not just about your interest rate anymore —
your loan structure can make a real difference to how much interest you pay over time.
Two features we get asked about all the time are:
- Offset accounts
- Redraw facilities
Both can help reduce interest… but they work very differently.
Let’s break it down in plain English.
Offset Accounts: Keeping Your Money Working for You
An offset account is simply a savings or transaction account linked to your home loan.
Instead of earning interest, the money sitting in this account reduces the balance your lender charges interest on.
Here’s how it works:
If you have:
- A $500,000 loan
- $50,000 sitting in your offset
You’ll only be charged interest on $450,000
Why many people like offsets:
You reduce interest without locking your money away
Your savings are still fully accessible — everyday spending, emergencies, whatever you need.
It can shorten your loan over time
Less interest means more of your repayments go towards paying down the loan.
It can be tax effective
You’re saving interest rather than earning income (which can be taxed).
This is especially important to get advice on based on your situation.
Great flexibility for future plans
If you’re thinking about upgrading, investing, or just want access to cash — this structure gives you options.
What to be aware of:
- Some loans with offsets come with annual package fees
- In some cases, interest rates may be slightly higher
- Usually only available on variable rate loans
Redraw Facilities: A “Forced Savings” Approach
A redraw facility works a bit differently.
Instead of keeping money separate, you pay extra directly into your loan.
That reduces your loan balance — and therefore the interest charged.
Example:
- $500,000 loan
- You pay an extra $50,000
Your loan balance becomes $450,000, and interest is calculated on that.
Why redraw works well for some people:
It helps you pay off your loan faster
Extra repayments go straight to reducing your debt.
It can create discipline
Because the money is less accessible, you’re less likely to dip into it.
Potential repayment flexibility
If you’re ahead, some lenders allow reduced or paused repayments (conditions apply).
What to watch out for:
- Access can be restricted depending on the lender
- It’s not always as quick or easy to withdraw funds
- For investors, using redraw for personal expenses can impact tax deductibility
(This is a big one — always worth speaking to your accountant)
So… Which One Is Better?
There’s no universal “best” option.
It comes down to:
- How you manage money
- Your goals (short vs long term)
- Whether the property is owner-occupied or an investment
- How important flexibility is to you
In many cases, we actually structure loans to use both strategically.
Why More Australians Are Reviewing Their Loans
You’re not alone in thinking about this.
In 2025, over 640,000 Australians refinanced their home loan — a 20% increase year-on-year.
That tells us one thing:
👉 People aren’t just accepting their current loan anymore
👉 They’re actively looking for smarter structures and better options
The Bottom Line
Offset and redraw facilities can both help reduce interest…
But only if they’re set up and used the right way for your situation.
And that’s where most people go wrong — they have the feature, but not the strategy behind it.
Let’s Work Out What’s Right for You
At Fox Mortgage Services, we don’t just look at your rate — we look at how your loan is structured and how it supports your goals.
Whether you’re:
- Looking to refinance
- Wanting to reduce repayments
- Planning ahead for investing or upgrading
We’ll walk you through your options and help you put the right structure in place.
No pressure. No jargon. Just clear advice.
Get in touch today to review your loan and make sure it’s working for you — not against you.