What’s the difference between offset and redraw?
When you have a loan and linked offset accounts, you are charged interest on your loan amount minus the money you have in your offset accounts. Therefore, the more money you have in your offset accounts, the more interest you’ll offset.
For example, if you had a variable loan amount of $500K and an offset account balance of $50K, you would only be charged interest on the remaining $450K.
You can only get an offset account at ubank if you have a Flex variable home loan. You can link multiple Spend or Save accounts as offset accounts. All the features you know and love on your Spend account will remain the same if you use it as an offset account, however you can’t earn interest on your Save account if it is an offset account. You also can’t have multiple loans attached to the same offset account.
Redraw happens when you make additional payments to your home loan and transfer those additional payments back into your Spend or Save account. In a similar way to offset accounts, you will be charged interest on your loan amount minus any additional payments you make. The additional payments will show as available funds for you to redraw whenever you like. That basically means you can get back some of the money you’ve put into your loan when you need extra funds.
You can redraw with all our ubank home loans. You can make unlimited additional payments on a variable home loan, however if you make or redraw more than $20K in additional payments on a fixed loan, you might be charged break costs.