What is the difference between redraw, offset, and extra payments?

Short answer: Extra payments = permanent reduction. Redraw = take extra back out. Offset = savings reduce interest, keep access.

What this actually means in plain English

Extra payments reduce your loan balance permanently. Redraw lets you take extra payments back out later. Offset uses your savings to reduce interest without touching the loan balance. Extra payments save the most interest but you lose access to the money. Redraw gives flexibility. Offset keeps your savings separate but working.

Key Facts

Extra payments: permanent, highest interest savings
Redraw: withdraw extra payments if needed
Offset: savings reduce interest, remain accessible
Extra payments = least flexibility, most savings
Offset = most flexibility, moderate savings

Example

Extra Payment: $10,000 permanent reduction

Redraw: $10,000 extra, can withdraw later

Offset: $10,000 in savings, interest on $490k not $500k

Flexibility Ranking: Offset > Redraw > Extra payments

Savings Ranking: Extra payments > Offset > Redraw

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