Monthly vs Fortnightly Mortgage Repayments

Switching from monthly to fortnightly repayments could save you $128,000 in interest and cut 5 years off your loan. But there's a catch most people miss.

The Simplest Hack That Saves Six Figures

On a $500,000 loan at 6% over 30 years, simply changing from monthly to fortnightly repayments will cut around 5.5 years off your loan and save over $128,000 in interest. That's it. One phone call to your bank.

How Does This Work?

There are two reasons fortnightly repayments are so effective:

1. You end up paying more than the minimum

There's a big difference between a "true" fortnightly repayment and an "accelerated" fortnightly repayment. A true fortnightly amount is calculated by multiplying the monthly repayment by 12 and dividing by 26. An accelerated fortnightly repayment simply halves the monthly amount.

Since there are 26 fortnights in a year, you make 26 half-monthly payments — which equals 13 months' worth of repayments in 12 months. You're automatically paying extra.

2. You reduce the loan balance sooner

Because interest is calculated daily, paying fortnightly means you reduce the loan balance earlier in the month. Every day your balance is lower, you save on interest.

Is Weekly Even Better?

Technically yes, but the difference is marginal. On our $500,000 example, weekly saves you $128,726 over the life of the loan — just $546 more than fortnightly. That's not nothing, but it's not the game-changer that switching from monthly to fortnightly is.

The Catch: Align With Your Income

Here's what most advice misses. If you get paid monthly but make fortnightly repayments, you're not gaining much. The money sits in your savings account earning nothing while it waits for the next repayment date.

In most cases, the greatest efficiency comes when you align your mortgage repayments with your income frequency:

Paid weekly? Repay weekly.
Paid fortnightly? Repay fortnightly.
Paid monthly? Repay monthly — but make the payment as soon as your salary hits.

The sooner you reduce the balance of the loan after getting paid, the less daily interest you'll pay. It's that simple.

Combine It With Extra Repayments

If you can spare an extra $50 per fortnight on top of the minimum, you'll save $164,730 in interest and be debt-free 7.3 years early. Small tweaks, compounded over time, produce massive results.