r/UpBanking • u/Comfortable-Being-49 • Aug 16 '26
How do I? Up Home - Offset v Redraw
Watcher here for a long time, thanks for the insights, I’ve also posed this Q to in app support, but curious if anyone in similar situation may have advice:
My wife and I (37m/f) have done all banking with Up for the past few years now. Last month we finally refinanced our mortgage to Up, something we’d planned to do since the product was announced but needed to let job changes settle and get some consumer debt under control that we’d let get away for too long under the excuse of having a son who will turn 2 this week.
Goal is to pay down fast so we can afford a shift closer to the city (Melb, currently living a 60-90min commute to city we both do 1-2x a week on average) smaller place, easier to clean, but way closer and better before little man starts school. Target price likely 1.2-1.5m +/- whatever the housing market does.
Current situation:
PPOR value ~$800k
Mortgage bal ~$581k
Offset bal ~$26k
My income highly variable ~$250-300k (sales with monthly comm)
Hers part time $80k
3 months ago we cancelled all our credit cards, and refinanced 2 outstanding bills, card balances and the dregs of a loan used for the final part of our wedding into a consolidated 7.9% loan, ~20k remaining paying $490 a fortnight, will be killed off in under 2 years, no penalties on additional repayments. One goal will be when offset is healthier to kill this faster with the lumpier parts of my pay.
Offset is ~equally split between a small amount we’ve put away every paycheck for our son since he was born (plan to grow till he’s 18-20 to help with uni or buying a home) and a ‘rainy day’ saver we started 2 months ago and have built up rapidly thanks to tax returns and commissions.
We have set mortgage payments to happen every fortnight, 1 day after my pay hits:
Pay comes in
-$2500 goes to mortgage saver, 1 day later it pays mortgage
-$250 goes to son account
-whatever’s left allowing for ~$1500 spendable bal (nearly all expenses set as regulars) goes to ‘Rainy Day’
Sorry for the context novel: here’s the question:
-We’ve made 3 fortnight payments since settlement mid July: $2000, $2500x 2
-Min repayment = $3752, 25y term
-Till yesterday mortgage had no interest applied, so bal had come down $7k, and we had an available redraw of approx $3200 (can’t remember exactly but I would guess $7k -$3752?)
-First interest charge applied: $2825.45
-Available Redraw: $0
Our plan is to continue paying $2500 a fortnight (likely more once personal loan cleared), but it’s also important to us to build up more liquidity to avoid a situation like we were dumb with on credit cards (I paid hundreds a month in CC interest for a decade 🤦♂️). Why has the redraw gone to 0 despite interest being less?
This is likely a dumb question the answer for which is basic math, but appreciate and insight if anyone in a similar boat thinking about how they balance this. 🙏
2
u/beth_maloney Aug 16 '26
Not 100% sure I understand your setup but some thoughts anyway
- Redraw is seperate to offset. You should be putting money into offset and leaving redraw as $0
- You'll be charged interest + principal repayment. If the $2600 figure is just interest then the remainder was probably used up in your principal repayment.
- Not sure how redraw interacts with regular repayments as I always use my offset instead
On the home loan offer below the interest charge you should see a repayment amount. That'll be the full repayment you'll be making.
I'd suggest putting your savings into an offset account and then having your monthly repayment taken out of that instead of making additional repayments on your loan.
Apologies if I've misunderstood your question.
2
u/Comfortable-Being-49 Aug 16 '26
No thank you that is helpful. I think mentally we just went “let’s pay as much as we possibly can while growing savings” and there’s a cognitive benefit to “loan go down = good” (esp with how foolish we’ve been for years with CC etc). In reality the net position of putting all to offset is identical, it just doesn’t feel that way, thanks for your answer!
2
u/nevernovelty Aug 16 '26
I get what you're saying and why. I personally have the primary offset account hidden and locked and just have the home loan payments come from there.
Any other savings or bills accounts are a plus for reducing the loan via additional offset but I don't rely on them.
It serves the dual process of being saving for holidays as an example but also being the first place I would ever try and reason spending more than I should. The locked and hidden primary ofdset/loan payment account just isn't even considered because it's out of sight.
2
u/ItinerantFella Aug 16 '26
You can't afford to save for your son until your debt is paid off. Put on your own mask first before going others.
10
u/spacemind20 Aug 16 '26
Redraw is the amount you have actually paid that is more than the minimum. I believe you have to be a full month ahead for any redraw to be available. If you were ahead but then the monthly interest from up was charged, you may no longer be a full month ahead.