Both offset accounts and redraw facilities are features that are often offered by lenders as part of their home loan packages. They can help you save money and reduce your mortgage balance, but they work in different ways.

1. Offset account: An offset account is a separate savings account that is linked to your home loan account. The balance in the offset account is offset against your home loan balance, which means that interest is calculated on the difference between the two. For example, if you have a home loan balance of $400,000 and an offset account balance of $50,000, the interest is calculated on $350,000. This can help you save money on interest charges over the life of your loan. You can withdraw funds from your offset account whenever you like, and you can also deposit funds into the account at any time.

2. Redraw facility: A redraw facility allows you to withdraw any additional payments you have made on your home loan. For example, if your minimum monthly mortgage repayment is $2,000, but you pay $2,500 each month, the extra $500 can be deposited into a redraw facility. You can then access this extra money at any time to use for other purposes. The redraw facility can be useful if you want to access some of the extra payments you’ve made towards your mortgage for things like renovations or unexpected expenses.

So, in summary, an offset account is a separate savings account that is linked to your home loan and helps reduce your mortgage interest, while a redraw facility is a feature that allows you to withdraw any additional payments you have made on your home loan. An offset account is typically more flexible and can help you save on interest charges over the long term, while a redraw facility is useful if you need to access extra funds in the short term.