Fortnightly vs Monthly: What’s better for Home Loan Repayments?

Fortnightly vs Monthly: What's better for Home Loan Repayments?

Fortnightly vs Monthly: What’s better for Home Loan Repayments?

Home Loan Repayments explained

Many Australian home buyers think it makes no difference whether you make repayments on a fortnightly or monthly basis. This could not be further from true. The frequency at which you make repayments makes all the difference.  Suppose you pay $2000 per month in home loan repayments. That’s a yearly total of $24,000. If you paid $1000 a fortnight instead you will end up paying a total of $26,000 for the year considering there are 26 fortnights. That’s an extra $2000, which is an entire month’s worth of repayments.

For your illustration, we have created the table below that shows a standard home loan of $500,000 with a 5.08% variable interest rate. The monthly repayment here would be $2708.61 and total interest paid over 30 years would be $475,098. However if the customer switches to a fortnightly repayment of $1353.70, the total interest paid gets reduced to $386,969 allowing you to save $88,129 over a 30-year term!

Home Loan at $500,000








Total Interest Paid




Total Interest Savings




Information is based on a 5.08% variable interest rate on a 30-year term (principal and interest repayments)

There are multiple ways of saving interest on a home loan. Extra repayments towards your mortgage and an offset savings account are common home loan features and good cost-saving tools. Increasing your repayments on your mortgage will help reduce the balance. At the same time, the funds in your offset account could be working to reduce the interests that you would pay on your home loan. Though remember that an offset account doesn’t actually reduce the loan amount per se, it just makes you pay less interest on your mortgage.

It is always advisable to talk to your bank and check to see if they can change your repayment frequency without you receiving penalties and start saving away!

Call 1300 307 155 and start saving today!

Compare Home Loans or RateContender – Let the banks bid on your loan