Home Loan Features Explained

An offset account is a transaction or savings account linked to your home loan. The balance held in the offset account is set against your loan balance for the purpose of calculating interest, so interest is generally charged only on the net difference. For example, a balance sitting in an offset account reduces the loan amount on which interest accrues while that money is held there. Offset features, the number of offset accounts permitted and any associated fees vary by lender and by product, and not every loan offers a full offset facility. This is general information only — whether an offset account suits your situation depends on your circumstances and the lender's policy.

Both can reduce the interest you pay, but they work differently. An offset account is a separate account whose balance is netted against the loan for interest purposes; the money remains yours to move freely as everyday funds. Redraw refers to extra repayments you have made above the minimum, which sit within the loan itself and can sometimes be withdrawn again, subject to the lender's redraw rules, limits and any fees. Redraw availability, processing times and conditions vary by lender, and some lenders may restrict or change redraw access. The choice between the two depends on how you use your money day to day and on the lender's product terms — it is a structural decision, not a headline-rate one.

There is no single answer, and we do not predict where rates will move. A fixed rate sets the interest rate for an agreed term, which gives repayment certainty but typically limits features such as extra repayments and offset, and may involve break costs if you exit or change the loan during the fixed term. A variable rate can move up or down over time, usually offers more flexibility, and exposes you to repayment changes. A split loan combines both. Which approach is appropriate depends on your priorities — certainty versus flexibility — your circumstances and the specific lender's policy and features. We can walk through the trade-offs in general terms so you understand the structure before you decide.

Lenders Mortgage Insurance is insurance that protects the lender, not the borrower, where the loan-to-value ratio is above a threshold the lender sets (commonly where a deposit is below a certain proportion of the property value). The premium is usually paid by the borrower and can sometimes be added to the loan. LMI thresholds, premium amounts and the circumstances in which it applies vary by lender and by individual situation, and some borrowers may have access to alternatives or guarantees depending on eligibility. This is general information only; whether LMI applies and how much it costs depends on your circumstances and the lender's policy.

It depends entirely on your circumstances, and interest-only carries risks that should be understood before you proceed. With an interest-only loan you pay only the interest for an agreed period, so the loan principal does not reduce during that time; repayments then typically rise once the interest-only period ends and principal-and-interest repayments begin. Because the balance is not reducing, you may pay more interest over the life of the loan, and you are exposed to repayment increases at the end of the interest-only term. Lender policies on interest-only loans, eligibility and maximum terms vary. We can explain the general trade-offs so the structure is clear, but whether it is appropriate depends on your situation and the lender's assessment.

In most residential lending scenarios, the lender pays broker commission. We explain remuneration in our Credit Guide.