Choosing between offset accounts and redraw facilities can significantly impact your property investment strategy. Understanding the differences, benefits, and tax implications helps optimize your loan structure and wealth building approach.
Understanding Offset Accounts
An offset account is a separate savings account linked to your home loan where the balance reduces the interest charged on your loan without reducing the principal.
Understanding Redraw Facilities
A redraw facility allows you to access extra repayments made on your home loan above the minimum required amount.
Key Benefits Comparison
Offset Accounts:
- Interest savings on full balance
- Easy access to funds
- Tax-free savings
- Maintain loan balance
Redraw Facilities:
- Reduces loan principal
- Generally lower fees
- May have withdrawal limits
- Changes loan balance
For property investors, offset accounts often provide better flexibility and tax advantages, while redraw facilities may suit those focused on debt reduction. Consider your investment strategy and seek professional advice.