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Yes, but if there were excess funds, I assumed you'd fully draw the I/O loan and park the excess in the offset, and that's effectively the same - you only pay interest on the amount you have outstanding. :) Offset accounts can be accessed via cheque, ATM, phone, internet, etc.

If you mean I/O plus offset, then it would be effectively the same, but have the advantage over a LOC that you could withdraw funds from the offset for private purposes without contaminating the deductibility of the loan interest. And as you mentioned, the LOC has interest-only for the life...