Mortgage Repayments - weekly, fortnightly or monthly?

Garry Tranter from Price My House for Free Limited

While the general rule of thumb is to match your repayments to your income frequency, if you want to save on interest or pay your loan off quicker, that might not be the best option.

Here, we take a look at repayment frequency options to help you choose the right repayment frequency for you.

WEEKLY

If you get paid weekly, then making your mortgage payments weekly is probably the best option.

By making more frequent payments, you will usually be saving on interest costs, as interest is usually calculated daily on the outstanding balance – so by paying weekly, you are paying down the principal amount faster. It might not seem like a lot, but it does add up…

By making four weekly payments, you will save interest compared to paying once a month. However, it does depend on how your mortgage repayments are structured to be repaid.

If they are structured to be paid weekly, then you probably won’t be making much in the way of interest savings, as that will already be factored into the total interest cost; if, however, your payment schedule is set up as monthly or fortnightly, then making more regular payments should save you interest.

FORTNIGHTLY

If you get paid fortnightly, but have your mortgage repayment frequency set up as monthly, you could then pay half the monthly mortgage payment each fortnight (which will save interest) or the full amount every second fortnight and pay your other bills on the other fortnight.

This may be most beneficial if your other bills are a similar amount to the monthly mortgage payment.

If you do make your payments fortnightly, but your loan schedule is monthly, paying half your required monthly payment each fortnight will provide two benefits – you will save on interest from making more regular payments AND your loan could be paid off quicker, as you will end up making an additional repayment each year (as there are 26 fortnights in a year, which is equal to 13 monthly payments).

MONTHLY

While making one monthly payment may not give you the potential interest savings that more frequent repayments can, it does make sense if you only get paid monthly – because making your payments late will cost you more in interest and fees in the long run.

However, if you do only make your payments monthly, paying a little bit extra each time will help you to reduce your interest costs and your loan term.