I am looking at buying my 1st home for PPOR, and have looked at different home loan options and packages. The best rate I could find has NO offset account - only free redraw facility. The ones with offset account are of a higher interest rate. And I am trying to decide which option is most suitable - as the difference in rate is about 0.2% i.e. $800 based on a 400k loan. Say I buy House A for PPOR with a 400k home loan. Over 5 years I pay off 60k principal and 40k "extra". Scenario one - in 5 years I purchase House B as an IP using the 40k "extra" as deposit, and continue to live in House A. Irrespective of whether that 40k was from a redraw or offset account, House B has full tax deductability. Scenario two - in 5 years I purchase House B as an PPOR using the 40k "extra" as deposit, and House A becomes an IP. IF I had a full offset account - the tax deductability is 400k-60k=340k. IF I had a redraw account - the tax deductability is 400k-60k-40k = 300k. Is this the correct understanding?