Offset and redraw save exactly the same interest
An offset account is a transaction account linked to your loan. The lender charges interest on the loan balance minus what's in the offset. Redraw is money you've paid onto the loan above the minimum, which you're allowed to take back out. Either way the interest is worked out on the same lower figure, so a properly linked full offset and redraw save the same dollar amount.
Both beat a savings account for most people, because the interest you don't pay on a loan isn't taxed, while interest you earn in a savings account is.
Where they differ
Something has to go right for an offset to work. It has to be opened, linked to the right loan, and kept linked. In July 2026 ASIC published a review of eight banks covering over 70% of Australian home loans (Report 837, Offsets, out of mind). Banks had paid over $55 million in compensation for offset failures, 55% of failures were accounts opened but never linked, and 86% came from manual staff errors. Redraw has nothing to link, so there's nothing to go wrong there.
Money in redraw has already repaid the loan. Taking it out is new borrowing, and if the property might ever become a rental, the tax treatment of that borrowing depends on what you use it for. An offset keeps savings separate from the loan. If there's any chance the home becomes an investment property, that difference can be worth a lot.
Offsets often come with a package fee. On a small balance the fee can cost more than the interest it saves.