Offset vs Redraw
Offset and redraw are assessed differently by lenders
Offset accounts and redraw facilities may look similar in practice, but lenders assess them differently from a risk and accessibility perspective.
These differences can affect serviceability, repayment assumptions, and how surplus funds are treated in an assessment.
This page explains how lenders assess offset and redraw, not which option is better.
What lenders are testing
When assessing offset or redraw, lenders consider:
- Accessibility of surplus funds
- Borrower behaviour and repayment patterns
- Whether funds are considered “committed” or “available”
- The impact on loan balance and interest calculation
The focus is on risk and predictability, not convenience.
How offset accounts are assessed
An offset account is a separate transaction account linked to a loan.
From an assessment perspective:
- Funds in offset remain accessible
- The loan balance is unchanged
- Interest savings are recognised, but the debt remains
Because funds can be withdrawn at any time, lenders do not treat offset balances as permanent repayments.
How redraw is assessed
Redraw involves additional repayments made directly to the loan.
From an assessment perspective:
- The loan balance is reduced
- Redraw access may be limited or conditional
- Funds are treated as having been applied to the debt
This can be viewed as a more committed reduction of debt, depending on policy.
Why assessment outcomes differ
Differences arise because:
- Offset funds can be removed instantly
- Redraw access is not always guaranteed
- Behavioural risk is assessed differently
As a result, lenders may treat surplus funds more conservatively when held in offset.
How offset and redraw fit into the assessment framework
These features affect:
- Capacity assumptions
- Risk modelling
- Loan behaviour analysis
They interact with serviceability buffers and borrower profile.
See: Serviceability Buffers
See: Borrowing Capacity: Why It Caps Out
How to use this information
This explainer helps you understand:
- Why lenders ask how surplus funds are held
- Why offset balances don’t always improve borrowing capacity
- Why assessment outcomes differ
It does not recommend a loan feature.
Related assessment explainers
- Fixed vs variable: what lenders assess
- Serviceability buffers
Important information
General information only. No personal advice is provided.