Fine Print

How lenders describe offset and redraw

Offset and redraw are the two words first-home buyers hear most often after “rate”, and they are the two words most often collapsed into one. Owen’s note keeps them apart. It does not quote a lender’s rate, and it does not say which public page is better. It shows you how to read a description so that a later statement does not surprise you.

Use it beside the comparison guide, where ten public pages — alphabetical, none of them ours — are given the same questions. This page is the vocabulary. That page is the list.

• Write “offset” and “redraw” as two headings before you open any lender page.
• Under offset, ask whether the page describes a separate deposit account.
• Under redraw, ask whether the page describes extra repayments that might be withdrawn.
• Ask whether the page says either feature can be suspended, cancelled, or limited.
• Ask whether a package fee is mentioned on the same page, and what it says the fee buys.
• Ask how a break cost is described if a fixed period ends early. Do not calculate one here.
• Note the date of the page. Descriptions are edited.
• If a worked example uses dollars, treat the dollars as the lender’s illustration, not as yours.
• Ask whether the description you read applies to variable loans, fixed loans, or both.
• Ask what the page says happens to an offset balance if you sell or refinance.
• Keep the Crown lease questions in another note. These words do not change the purpose clause.

Why the words are not interchangeable

Offset, in the way Australian lender pages usually speak, means money held in an account linked to the loan is described as reducing the balance on which interest is calculated. The money is still described as your money in a deposit account, available to spend, which is why people like the idea. The precise mechanics — what counts as linked, how often interest is calculated, what happens if the account is overdrawn — are on that lender’s page and in their terms, not in this sentence.

Redraw, in the same loose speech, means you have paid extra off the loan and the lender’s terms may let you draw some of that extra back. The extra has already reduced the loan. Getting it back is a new act, allowed only if the terms say so, and sometimes only if the lender agrees at the time. A page can describe redraw as available and still describe situations in which it will not be. Read for the exceptions, not for the friendliest adjective.

A buyer who wants a pool of money for a rates notice or a broken hot water unit may need the kind of access an offset account is described as giving. A buyer who wants to park spare pay onto the loan and rarely take it back may care more about how redraw is described. Many people want both and discover the page offers one. That discovery is the point of reading before you apply. Application is a step you take with the lender, if you take it. This site has no apply button, and it will not pretend a glossary entry is an approval.

Questions about access, statements, and fixed periods

Ask the public page, then ask the person if you speak to one: how do I see the balance that is supposed to be offset? How often is interest described as being calculated? What does a statement call the available redraw, and is that number the same thing as money in a transaction account? If you cannot explain the difference to the other person on the loan, you do not have it yet. Sit with the page until you can.

Ask whether the description changes during a fixed-rate period. Some pages talk about offset on variable loans and use different language, or none, during a fixed period. Some describe a break cost if the fixed period ends early. You are not working the formula. You are checking that the page admits a formula exists, so you do not fix a period under the impression you can leave it as if it were a monthly subscription. Write “break cost: page mentions / page does not mention” and the date. Leave the arithmetic to the lender’s own illustration if they give you one later, and check that illustration against the terms.

Package fees sit near these features because a page may describe offset as part of a package with an annual fee. Ask what the page says is inside the package, and what it says happens if you close the card or the deposit account and keep the loan. A fee you did not see is still a fee. A feature you assumed was free because a friend said so is a question, not a fact.

How this sits next to the ten public pages

The comparison guide lists ANZ, Bank of Melbourne, Bankwest, Bendigo Bank, Commonwealth Bank, ING, Macquarie, NAB, St.George and Westpac in that order, each with a link to a public page and the same four questions. Read this vocabulary first if the words feel slippery, then walk the list. Do not start with the lender a relative uses and stop there. The point of a field guide is the field.

Zenith Lens is an independent home buying guide publisher. We are not affiliated with, endorsed by, or sponsored by St.George Bank – A Division of Westpac Banking Corporation, or its related entities. All trademarks belong to their respective owners.

When a page uses a different word — “split”, “combo”, “mortgage offset facility” — write the word they use beside your heading. You are translating, not collecting brands. If two pages contradict each other, keep both translations. You may be looking at two different products. You are not looking at a mistake this guide is obliged to referee.

None of this tells you what you can afford. Affordability is income, the price in your contract, the costs of owning a leasehold home, and the repayments a lender is actually prepared to contract. We do not know those repayments. Anyone who offers you a single Canberra figure on a postcard is not this desk.

Notes you can still use in a year

Date every note. Store the PDF or the printout of the page you relied on, because public pages are edited and your future self will not remember the wording. When a statement arrives after completion, compare three labels: what the statement calls the offset account, what it calls available redraw, and what fee it shows for a package. If a label is missing, ask the lender which of the features you discussed was actually documented. The conversation before a loan and the terms after it are supposed to meet. When they do not, the terms are what you signed. Ask for them to be pointed out. Do not ask this website to override them.

Bring the notes to your conveyancer only if a loan condition or a completion date depends on them. Otherwise keep the notes in the loan sleeve of the folder described in the first-month guide. The lease sleeve stays about the block. The loan sleeve stays about the words on the statement. Mixing them is how a package fee and a rates notice become one anxious pile. They are different payees.

What this page does not do