Home loan guide
Which features do you need, and which ones aren't worth it?
When choosing a home loan, the interest rate isn't the only factor that matters. Features like offset accounts, redraw facilities, and flexible repayments can make a huge difference to how quickly you pay off your mortgage and how much interest you save. Understanding which features suit your lifestyle and goals can help you avoid unnecessary costs and choose the loan that truly works for you.
This guide explains what each feature does, what it costs and when you are likely to use it.
Some home loans allow you to make extra payments along with your regular monthly ones. These additional repayments lower your loan's principal amount. This means you will pay less interest during the loan term.
For a hypothetical $500,000 loan at 5% over 30 years, an extra $200 a month saves about $77,470 in interest and pays the loan off around 51 months earlier. This assumes monthly repayments, a constant rate, no fees and no redraws.
Some loans do not allow you to make extra repayments. This often happens with fixed-rate loans. Some lenders may also limit how much extra you can pay each year. They might also charge fees if you pay off your loan early. However, some loans do let you make unlimited additional repayments. It is important to read the terms carefully.
Read more: Home Loan Extra Repayment Calculator
Check how redraw works, including access limits and fees, before treating extra repayments as money you can withdraw at any time.
An offset account is a kind of transaction account connected to your home loan. The money in this account helps lower the interest you pay on your mortgage. For instance, if your loan is $300,000 and you have $50,000 in your offset account, you will pay interest only on $250,000.
An offset reduces the interest charged on your loan rather than paying you savings interest. Tax treatment can differ if the property is an investment or later becomes one. Get tax advice before moving money between loan and offset accounts.
Offset accounts are a great feature, and they offer a lot more flexibility compared to a redraw facility.
If you're using a redraw, you'll need to jump through a few extra hoops to access your money.
With an offset account, the money is there whenever you need it: it's a normal transaction account.
Some offset loans have an annual package fee, a monthly account fee or a higher interest rate. An offset does not always require a professional package. Compare the actual fees and rates for each product.
For example, if an offset adds $400 a year in fees and the loan rate is 4%, an average $10,000 offset balance saves about $400 a year before other differences. A higher loan rate can change that break-even point.
Read more: What is an Offset Account?
A redraw facility lets you withdraw extra repayments you've made on your home loan. It's different from an offset account because the money stays tied to your loan, not a separate savings account. In simple terms, it turns your extra repayments into accessible funds without needing a new account.
Every month, you pay a minimum loan repayment. If you pay extra, those funds go into your redraw.
Example:
Redraw funds continue to reduce your interest costs while remaining accessible when needed.
Using a redraw facility can help you save money and stay flexible:
Before using redraw, be aware of some restrictions:
Redraw is ideal for borrowers who:
An offset, redraw and a savings account can all hold money you want to keep available, but access and tax treatment differ. Compare those differences alongside the loan rate and fees.
Feature | How It Works | Benefits | Considerations | Tax Implications |
Offset Account | Linked to your home loan; reduces loan balance for interest calculations | Tax-free interest savings; funds easily accessible | Fees or a higher rate may outweigh savings on a small balance | Interest saved is not taxed; effective return equals mortgage rate |
Redraw Facility | Extra repayments are stored in loan; can be withdrawn later | Reduces loan balance and interest; encourages faster repayment | Limited access or redraw fees; less flexible than offset | Redraw is further borrowing; deductibility depends on how the money is used |
High-Interest Savings Account | Money in separate account earning high interest | Potentially higher interest rates; keeps savings separate from mortgage | Interest is taxable; may yield less net savings than offset | Taxable income reduces effective return; higher tax rates lower net benefit |
Which Option Is Best? | Depends on your goals and cash flow needs | Offset: quick access & tax-free savings; Redraw: faster loan repayment; Savings: separate account with interest | Consider fees, balance requirements, and withdrawal flexibility | Consider personal tax situation for net benefits |
A split rate home loan allows you to separate your loan into two parts. One part has a fixed interest rate. This means your payments stay the same. The other part has a variable rate, which offers you more flexibility. With this setup, you get the security of consistent payments. You can also make extra repayments on the variable part.
A split rate might be a good choice if you are concerned about interest rate changes but still want to make extra payments. It provides security and also offers some flexibility.
Compare the rate, fees and extra-repayment limits on each split. The fixed portion can restrict changes during the fixed term.
Interest-only loans let you pay just the interest for a specific time. This means your monthly repayments are lower.
Interest-only repayments may help with short-term cash flow, but the principal does not reduce during that period. Investment-loan interest is not automatically deductible: the use of the borrowed money matters.
At the same rate and loan term, interest-only repayments usually increase total interest compared with principal-and-interest repayments. Repayments can rise sharply when the interest-only period ends because the principal must be repaid over the remaining term.
Check to see if you are eligible for a home loan
Many loans offer weekly, fortnightly or monthly repayments. Paying half the monthly repayment every fortnight makes 26 half-payments, equivalent to 13 monthly repayments a year. A lender's standard fortnightly amount may be calculated differently, so check it before assuming you are paying extra.
Match repayments to your payday if that makes budgeting easier. Check the lender's repayment calculation before counting on an interest saving from changing frequency alone.
Some lenders offer an agreed repayment pause or hardship arrangement. Contact the lender before changing repayments; a missed payment is not an approved holiday. Interest may continue to accrue, and the lender should explain what happens to the balance, term and later repayments.
A line of credit home loan allows you to borrow money up to a certain limit when you need it. It works like a credit card. You will only pay interest on the amount of money you have taken out.
This feature can help you with your renovations or other projects. You might need money bit by bit over time for these tasks.
A line of credit can have higher rates and fees. Check how you will reduce the balance: flexible access can make it easier to keep borrowing without repaying the principal.
Some lenders let you substitute the property securing your loan when you move. The lender must approve the new security and any changes to the borrowing. Valuations, fees and settlement timing still matter; simultaneous settlement is one possible arrangement, not a universal rule.
A package may offer rate discounts or waive particular fees in return for an annual charge. The fee and benefits vary by lender and product. Compare the total cost with a basic loan rather than assuming a package is cheaper above a particular loan size.
Our NAB and CommBank reviews explain features to check when comparing lenders.
Choosing the right home loan features depends on your loan type. Variable, fixed, and split loans each work differently. Knowing how features like offset accounts, redraw, and flexible repayments work can help you save money and manage your loan better.
Feature | Variable Loan | Fixed Loan | Split Loan |
Offset Account | Depends on product | Limited | Usually variable portion; check product |
Redraw Facility | Flexible | Limited | Usually variable portion; check product |
Repayment Flexibility | High | Limited | Partial flexibility |
Interest Rate Risk | Can go up or down | Fixed | Mixed risk |
Comparing features across loan types helps you choose the home loan that suits your needs. Think about access to funds, interest savings, and how much flexibility you need.
Not all home loan features are as simple as they seem. Some come with hidden costs or restrictions that can affect your budget and savings.
A low headline interest rate may look attractive but doesn't include fees, restrictions, or missing features. Always consider:
Check the fees and access rules against how you plan to use the loan before accepting the offer.
Home loans come with many features, but not every option suits every borrower. Choosing the right home loan features can save money and simplify your mortgage journey.
A broker can explain the loan offer, fees, product terms and relevant target market determination. Start with the features you will use and what they cost.
Choose the features you expect to use, then compare their cost with the saving or flexibility they provide.
Call us on 1300 088 065 or complete a free assessment to speak with one of our home loan experts.
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This is a hypothetical example, not a client result. On a $640,000 loan, a constant $20,000 balance in a 100% offset means interest is initially calculated on $620,000. At 6%, that balance reduces interest by about $1,200 over a year before fees, assuming it remains there and the loan balance stays above it.
The total saving and payoff date depend on future rates, repayments, withdrawals and fees. Use the mortgage calculator to compare your own assumptions.
The Australian Government offers several schemes to help first home buyers enter the property market faster. These programs reduce upfront costs and make homeownership more achievable. By using them wisely, you can save thousands and avoid unnecessary fees.
The Australian Government 5% Deposit Scheme helps first home buyers purchase with as little as a 5% deposit.
Recent changes from October 2025 make it even easier to access.
Read more: Housing Australia First Home Guarantee
The Australian Government 5% Deposit Scheme includes a pathway with a minimum 2% deposit for eligible single parents or single legal guardians with dependent children. There is no income cap under the current scheme. Property-price caps, ownership rules and the participating lender's credit assessment still apply. See the current single-parent rules.
Cash grants and duty concessions have separate rules. Queensland's $30,000 grant continues for eligible new-home contracts from 1 July 2026, for a total value below $750,000. SA's $15,000 new-home grant and eligible new-home duty relief no longer use the old $650,000 cap for current transactions.
Use our stamp duty calculator to estimate duty for your state and purchase, then check the concession conditions before setting your cash budget.
Eligible ACT HBCS transactions from 1 July 2026 attract $0 duty without an income or property-value cap. Previous ownership and residence conditions still apply. WA, NSW, Victoria and the NT use their own grant rules; do not apply a duty threshold as a cash-grant threshold.
Check our grants guide, state duty guide and the official sources below.
Using these schemes can affect your home loan in several ways:
Speak with a mortgage broker to see which schemes you qualify for. They will provide tailored advice and guide you through each application.
Redraw lets you access extra repayments under your lender's rules. Check the available redraw balance; it can be less than the total extra repayments you have made.
Yes, in Australia you can often use your available redraw to make mortgage payments or cover other expenses.
Every extra dollar you repay reduces your loan balance. A lower balance means less interest charged over time.
An offset account reduces interest using your savings balance. A redraw facility gives access to extra repayments you've already made.
Both can reduce interest. Compare access rules, fees and your tax circumstances; neither is always better.
Check the available redraw balance with your lender. It may be less than the extra repayments you have made and can change under the loan terms.
Some lenders charge fees or limit the number of redraws. Free unlimited redraw home loans are the most flexible option.
Absolutely. Many full-feature home loans allow both, helping you reduce interest and still access funds when needed.
They reduce interest, shorten loan terms, and give repayment flexibility, helping borrowers save money and pay off loans faster.
Compare the total cost and access rules for your balance and repayment plans. There is no single product that suits everyone.
Tell our team which features you expect to use and how much you normally keep in savings. We can compare the rates, fees and access rules for suitable loans.
If you want to get started, please give us a call on 1300 088 065 or book a free assessment online to see how we can help.
