Both of these features help pay less interest, but they behave very differently when it comes to spending. chawlafinance.com.au assists clients in choosing the structure that matches their financial habits.
The Offset Account (The Flexible Friend)
This is a separate transaction account linked to the loan. If you owe $500k and have $50k in the offset, interest is only paid on $450k. It works just like a normal bank account. You can tap your card for a coffee, and the bank just adjusts the interest on the fly.
The Redraw Facility (The "Speed Bump")
Redraw isn't an account; it's a feature inside the loan. Extra payments are made, and they can be "pulled back out" if needed. However, redrawing can sometimes feel like trying to get a refund from a grumpy shopkeeper. There might be fees, or it might take a day to process. It’s great for those who want to be "forced" to save.