Tag: home loan

Home loan offset accounts and redraw facilities work in similar ways; they both allow you to reduce the balance of your home loan, and therefore the interest charged, by applying extra money to your debt. Redraw A redraw facility allows you to access extra repayments that you may have made on your mortgage. How does this save you money?  By depositing extra money into your home loan, you are reducing the amount of interest charged to your loan as your loan balance is reducing. If you had this money sitting in a savings account you would be earning interest (and possibly paying tax on it) and the interest rate is generally at a lower rate than the interest rate on your home loan. For example, if your home loan interest rate is 4% and your savings account is earning interest...