Differences between home loan redraw and an offset account - NAB
Redraw vs. offset
Both redraw facilities and offset accounts reduce the interest you pay on your loan. Any extra money in redraw or sitting in an offset account lowers your loan balance for interest calculations, which can help you pay off your home loan sooner.
The key difference is access and flexibility. Redraw lets you withdraw extra repayments you have already made, while an offset account keeps your savings separate and usually easier to access for everyday spending.
The right choice depends on your goals and cash flow needs, with NAB offering redraw and offset features on eligible variable rate home loans.
Watch our video to learn more.
How redraw and offset work
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 deposit account (such as a transaction or savings account) linked to your eligible variable rate home loan
. |
| How it can save you money | Redraw facility Having funds available in redraw reduces the balance of your home loan. Interest is calculated on this lower balance, reducing the amount of interest that you’ll be charged. | Offset account With an offset account, interest is charged on the difference between the balances of your home loan and offset account. The more money you have in the offset account, the less interest you pay on your home loan. It’s important to note that when you link an account as an offset, you will no longer earn interest on the balance of the offset account. |
| 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 though online banking, by calling us on 13 22 65 or chatting to one of our banking specialist in branch. | Offset account Access your money in the same ways that you would normally use your deposit account. For example, through using a debit card to make purchases or using online banking to transfer funds. |
| Help with managing your money | Redraw facility Adding funds to your redraw may help you save, as the funds cannot be accessed directly and must be transferred into a deposit account before they can be spent. | Offset account NAB offers the ability to link up to 10 offset accounts to your home loan, allowing you to create different buckets for expenses and savings goals. Many people find this approach helps to simplify day-to-day money management. |
| 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.
Is offset or redraw better?
Neither is universally better – it depends on how you use your money.
- Redraw suits borrowers who make extra repayments and don’t need frequent access to those funds.
- Offset suits borrowers who want savings kept separate and readily available for everyday use.
On eligible NAB variable rate home loans, both reduce interest by the same amount. The key difference is access and flexibility.
Tax note: For investment properties, using redraw instead of an offset can affect tax deductibility. Consider speaking with a tax adviser before choosing.
Explore other topics
What is an offset account?
Learn about offset accounts, how they work and the benefits of a multiple offset arrangement.
Home loan redraw
Discover how redraw works, check eligibility criteria and learn how building redraw could benefit you.
Guide to refinancing your home loan
Find out all you need to know about refinancing your home loan.
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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.