🏡 Choosing the Best Mortgage Repayment Frequency: Weekly, Fortnightly, or Monthly?

When managing your home loan, selecting the right repayment frequency isn't just a matter of convenience; it can significantly impact the total interest paid and the time it takes to pay off your mortgage. Understanding the differences between weekly, fortnightly, and monthly repayments can help you make an informed decision that aligns with your financial situation and goals.

📊 How Repayment Frequency Affects Your Loan

1. Monthly Repayments

• Standard Option: Most home loans are structured with monthly repayments.

• Interest Calculation: Interest is calculated on the outstanding balance, and monthly repayments are fixed.

• Consideration: While manageable, monthly repayments may result in paying more interest over the life of the loan compared to more frequent repayment schedules.

2. Fortnightly Repayments

• Structure: You pay half of your monthly repayment every fortnight.

• Extra Repayment: Over a year, this results in 26 payments, equivalent to 13 monthly repayments.

• Interest Savings: This method can reduce the loan term and total interest paid, as the additional payment reduces the principal balance more quickly.

3. Weekly Repayments

• Structure: You pay a quarter of your monthly repayment every week.

• Extra Repayment: Over a year, this results in 52 payments, equivalent to 13 monthly repayments.

• Maximum Impact: Weekly repayments can accelerate loan repayment and reduce interest costs more than fortnightly or monthly options.

💰 Potential Savings Example:

Consider a $600,000 mortgage over 30 years at an interest rate of 6.83%. Here's how different repayment frequencies could impact your loan:

Repayment Frequency	Total Interest Paid	Interest Saved Over 30 Years	Time Saved
Monthly	$812,478	—	—
Fortnightly	$608,107	$204,371	6 years, 6 months
Weekly	$606,129	$206,349	6 years, 7 months

Source: Canstar

As shown, increasing the repayment frequency can lead to significant interest savings and a shorter loan term.

🧠 Factors to Consider

• Budgeting Preferences: Align your repayment frequency with your income schedule for better cash flow management.

• Lender Policies: Not all lenders may offer flexible repayment options; consult with your lender to understand available choices.

• Financial Goals: Consider your long-term financial objectives and how different repayment frequencies align with them.

📝 Conclusion

Choosing the right mortgage repayment frequency is a strategic decision that can impact your financial future. While weekly repayments offer the most significant savings, fortnightly and monthly options may be more suitable depending on your circumstances. It's essential to assess your financial situation, consult with your lender, and consider how each option aligns with your goals.

If you're unsure which repayment frequency suits you best, consider seeking advice from a mortgage broker or financial advisor to make an informed decision.