Fortnightly Repayment Calculator
Could switching to fortnightly repayments save you thousands?
Paying fortnightly instead of monthly is one of the simplest ways to get ahead on your mortgage. The maths behind it is surprisingly powerful.
How does it work?
There are 26 fortnights in a year but only 12 months. If you pay half your monthly repayment each fortnight rather than the full amount once a month, you end up making the equivalent of 13 monthly repayments each year instead of 12. That one extra repayment per year goes directly against your loan principal and compounds over the life of the loan, reducing both your loan term and the total interest you pay. The calculator below shows exactly how much difference this makes for your loan size and rate.
The calculator has been provided in good faith as a guidance tool only. Results are not financial advice, are a guide only, and are not a guaranteed outcome or quote. Borrowers should always discuss their individual situation with an Australian Credit Licensee or authorised Credit Representative.
What affects how much you save by going fortnightly?
Your loan size
The larger your loan, the more interest you are paying and therefore the more you save by reducing your balance faster.
Your interest rate
A higher rate means more interest is being charged on your outstanding balance. Fortnightly repayments become more powerful when your rate is higher.
How early in the loan you switch
The earlier you start making fortnightly repayments, the more time for the compounding effect to work. Switching in the first few years saves significantly more than switching near the end of your loan.
Making the most out of fortnightly repayments
• Check how your lender calculates and applies interest. Most lenders calculate home loan interest daily and charge it monthly. So simply making fortnightly repayments does not necessarily mean you receive an additional interest-saving benefit. The benefit mainly comes from paying more frequently and, with a true fortnightly repayment, potentially making the equivalent of an extra monthly repayment each year.
• Align your fortnightly repayments with your pay cycle if you are paid fortnightly. The money leaves your account on the same day it arrives, reducing the temptation to spend it.
• Combine fortnightly repayments with an offset account or extra repayments for an even greater effect.
Fortnightly repayment questions we get asked a lot:
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Yes, and it matters. Most lenders calculate home loan interest daily and charge it to the loan monthly. Some lenders offer fortnightly repayments based on your monthly repayment amount, while others calculate the repayment as half the monthly amount every two weeks. The latter results in 26 half-payments per year, which is equivalent to 13 monthly repayments rather than 12, potentially reducing interest and shortening the loan term. Check with your lender how its fortnightly repayment option is calculated.
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Most Australian lenders offer fortnightly repayments as a standard option. Check your loan conditions or contact your lender. If switching is not possible with your current lender, it is worth factoring repayment frequency into your decision when comparing lenders.
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Usually yes. Contact your lender and ask to change your repayment frequency. Some may require a written request or a form.
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