Switching from monthly to fortnightly repayments is the cheapest trick in home lending — but only when it is set up the way most people assume it is. Here is what actually changes.
Helps you work out: what your repayments are weekly, fortnightly or monthly — and how much an offset balance or extra repayments save you.
Standard repayment
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Total interest
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Total cost
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The figures above are the standard repayments on this loan — no offset, no extras. Paid off in --.
Pay it down faster
Switch to accelerated repayments, add an offset balance or pay a bit extra each month, and see what it does to the standard loan on the left.
Paying half your monthly repayment every fortnight adds up to 13 monthly repayments a year instead of 12.
Time saved
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Interest saved
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Balance still owing at the end of each year — the sooner the green line reaches $0, the sooner the loan is gone.
General advice warning
The results provided by this calculator are estimates only and should not be taken as personal financial advice. The calculations are based on the assumptions you have entered and do not take into account your personal objectives, financial situation or needs. Before making any financial decisions, we recommend you consult with a qualified financial adviser. Financial Elements PTY LTD (Corporate Credit Representative Number 499510) is an Authorised Corporate Credit Representative of BLSSA Pty Ltd (Australian Credit Licence 391237).
There is no compounding magic here. Paying fortnightly saves money because, done the common way, it quietly puts an extra month of repayments into every year.
There are 26 fortnights in a year, so half a monthly repayment paid 26 times equals thirteen monthly repayments, not twelve. That extra month goes almost entirely against your principal, which is why the loan finishes years early.
Fifty-two weekly payments at a quarter of the monthly figure also comes to thirteen months worth. The result is close to fortnightly; the small extra benefit comes from reducing the balance a little sooner each cycle.
Some lenders divide your annual repayment by 26 instead of halving the monthly figure. You pay the same total each year, so the loan runs its full term. Always ask which method your lender applies before counting on the saving.
Only when the fortnightly amount is half your monthly repayment. That is the common set-up, and it means paying roughly 8% more each year. If your lender instead splits the annual total into 26, nothing changes except the timing.
Yes, and the effect is much the same. Fortnightly simply automates it, which suits people paid fortnightly. If your income arrives monthly, an extra lump each quarter can be easier to manage.
On most Australian variable loans, yes — interest is calculated on the closing balance each day and charged monthly. Repaying more often reduces the balance sooner, which is a small additional saving on top of the extra month.
Almost always, and usually at no cost. Fixed-rate loans often cap how much extra you can pay each year, so check the annual limit before switching.
No. It compares principal and interest at the rate you enter. Account and package fees are not affected by how often you repay.
We will check how your lender actually calculates fortnightly repayments, and whether a switch, a split or an offset does more for your situation.