Extra repayments calculator
The monthly version of the same idea.
Fortnightly Repayment Calculator
Paying half your monthly repayment every fortnight is the simplest way to get ahead on a home loan. Because there are 26 fortnights in a year, you make the equivalent of 13 monthly payments instead of 12.
Is that number right for your situation?
A calculator applies one formula. Lenders apply their own, and they disagree with each other. Send us what you worked out and we will tell you how it looks against real lender policy.
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Where the saving comes from
There is no trick and no special product. A year has twelve months but twenty-six fortnights. If your fortnightly payment is exactly half the monthly one, you pay thirteen months worth over a year rather than twelve.
That extra month goes almost entirely to principal, and because it lands every year the effect compounds. On a typical thirty year loan it commonly removes several years and a substantial amount of interest, for what feels like no change at all.
The mistake that cancels it out
The saving only works if your fortnightly amount is half the monthly repayment. Some lenders instead calculate a fortnightly figure that divides the annual amount by 26, which is slightly less than half the monthly payment. That schedule pays exactly the same over a year and saves you nothing.
It is worth checking which one your lender has applied, because the two look almost identical on a statement and only one of them gets you ahead. If yours is the second kind, ask for it to be changed or simply nominate the higher amount yourself.
If your pay cycle does not match
Aligning repayments with your pay is genuinely useful for budgeting, but it is the amount that creates the saving, not the timing. If you are paid monthly, you can achieve exactly the same result by adding one twelfth to each monthly payment. The extra repayments calculator shows that version.
An offset account works alongside either approach and reduces interest without changing your repayment at all.
Common questions
Almost all do on variable loans, and most on fixed loans, though fixed loans often cap how much extra you can pay each year. It is normally a simple change you can request without refinancing.
Marginally, and not enough to matter. The bulk of the benefit comes from making the equivalent of thirteen monthly payments a year, which both achieve. Choose whichever matches your pay cycle.
Rarely, unprompted. It reduces the interest they earn. It is one of the more common examples of a change that costs nothing and is simply never suggested.
Yes. Repayment frequency is usually easy to change, so if the fortnightly amount stops suiting your budget you can revert to monthly.
Small change, years off the loan
We will check whether your lender has set this up the way that actually saves you money.
Related
Offset account calculator
Cut interest using money you already hold.
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A short review of your current loan.