However, just because it’s simple doesn’t mean it’s easy. This is because if you’re on monthly payments, you repay the mortgage 12 times a year. With a fortnightly payment, you are making 26 payments, or 13 four-week blocks, per year.

This means you need to essentially find an extra near month’s worth of cash to put towards the mortgage every year. In this sense switching to a more regular payment is more of a long-term play potentially at the expense of short-term budgeting.

The pay-off, though, can be worth it. Using InfoChoice’s mortgage calculator, you can easily input your information and toggle between monthly, fortnightly, or weekly repayments to see how you could save in the long run.

Money-saving scenario

For example, if you had a $400,000 mortgage at a 5.80% p.a. interest rate over a 30-year term, you’d have a monthly repayment of $2,347, resulting in $444,924.49 in interest paid over 30 years.

If you switched to a fortnightly payment, you’d pay $1,173.51 a fortnight, which results in $352,407.52 in interest paid, saving nearly $100,000! You would also pay off the mortgage after 25 years, not 30.

Here’s what to do or consider before changing the repayment frequency.

Ensure your home loan allows for it

Many variable-rate home loan products allow to change your repayment types between one of the three, however it’s worth double checking. On the other hand, many fixed-rate home loans might not allow you to flip-flop.

If your home loan does not allow for changes in repayment frequency, you could also consider extra repayments if the product allows for that option. And if you haven’t looked at your interest rate in a while, it could also be worth considering refinancing. Refinancing could allow for not only a lower interest rate, but also more flexible terms.

Make sure you can afford it

Switching to a fortnightly or weekly payment sounds simple, but it could prove to be a strain on your finances.

If you consider the repayment scenario above of $2,347 a month, and switching to $1,173.51 fortnightly payments, that’s an extra $2,347 a year you’ll need to come up with, or the equivalent of an extra $45 a week.

If every dollar is accounted for in your budget, where is the $45 a week going to come from? Maybe you will have to re-consider those streaming plans, that gym membership, reduce your regular savings, or shop around for better phone and internet plans.

A more practical way to look at this is looking at your salary. A common marker for ‘mortgage stress’ is if your mortgage is 30% or more of your salary. If the extra money per year tips you into mortgage stress then maybe re-consider the plan.

Of course, the ‘30% rule’ affects everyone differently, and is primarily applicable to those on lower incomes. Non-discretionary living costs are fixed up to a certain point, so higher income households might be able to afford directing a bigger proportion of their salaries to the mortgage.

Consider aligning payments with your payslips

If you’ve done the maths and discovered you can afford the extra costs, consider aligning the more regular payments with your pay cycle. Many PAYG employees in Australia are paid fortnightly, so if you schedule it around when pay goes in, you might not even notice the extra money going out.

This also allows for easier budgeting, and you can then re-work your budget to take into account your regular savings and other expenses.

Compare more frequent payments to using an offset account

An offset account is a common add-on for variable-rate home loans - less-so for fixed-rate products - and they allow you to lower total interest payable and potentially pay off the home loan sooner. In this sense they have a similar goal of switching your repayment frequency, however the way offsets operate in practice is different.

An offset account is essentially a bank account attached to the home loan that ‘offsets’ your mortgage interest. Your repayments won’t increase, but you could potentially save thousands in interest. One major pro with an offset is that you have the flexibility to withdraw the funds again if you need them.

A downside of an offset account is that it often attracts a monthly fee or an interest rate premium. In this case you’ll want the benefits to outweigh the costs. Another downside of an offset account is that they may not be 100% offset - some banks might offer only 80% offset for example.

If you’re after a lower-cost option, you could also consider a redraw facility, but these operate slightly differently.

Offset saving example

If you borrowed $400,000 at a 5.80% p.a. interest rate over 30 years, you’d be paying $2,347 a month on the mortgage. If you started with a $10,000 offset balance and your net offset deposit was $500 - such as your monthly savings - you could save more than $180,000 in interest over the life of the loan.

Update resultsUpdate
LenderHome LoanInterest Rate Comparison Rate* Monthly Repayment Repayment type Rate Type Offset Redraw Ongoing Fees Upfront Fees LVR Lump Sum Repayment Additional Repayments Split Loan Option TagsFeaturesLinkCompare
6.04% p.a.
6.06% p.a.
Principal & Interest
Featured Online ExclusiveUP TO $4K CASHBACK
  • Immediate cashback upon settlement
  • $2000 for loans up to $700,000
  • $4000 for loans over $700,000
5.99% p.a.
5.90% p.a.
Principal & Interest
  • No application or ongoing fees. Annual rate discount
  • Unlimited redraws & additional repayments. LVR <80%
  • A low-rate variable home loan from a 100% online lender. Backed by the Commonwealth Bank.
6.04% p.a.
6.06% p.a.
Principal & Interest
Important Information and Comparison Rate Warning

Base criteria of: a $400,000 loan amount, variable, fixed, principal and interest (P&I) repayments. All products with a link to a product provider’s website have a commercial marketing relationship between us and these providers. These products may appear prominently and first within the search tables regardless of their attributes and may include products marked as promoted, featured or sponsored. The link to a product provider’s website will allow you to get more information or apply for the product. By de-selecting “Show online partners only” additional non-commercialised products may be displayed and re-sorted at the top of the table. For more information on how we’ve selected these “Sponsored”, “Featured” and “Promoted” products, the products we compare, how we make money, and other important information about our service, please click here.

Monthly repayment figures are estimates only, exclude fees and are based on the advertised rate for a 30 year term and for the loan amount entered. Actual repayments will depend on your individual circumstances and interest rate changes. For Interest only loans – the monthly repayment figure is applicable only for the interest only period. After the interest only period, your principal and interest repayments will be higher than these repayments. For Fixed rate loans – the monthly repayment is based on an interest rate that applies for an initial period only and will change when the interest rate reverts to the applicable variable rate.

The Comparison rate is based on a secured loan amount of $150,000 loan over 25 years. WARNING: These comparison rates apply only to the example or examples given. Different amounts and terms will result in different comparison rates. Costs such as redraw fees or early repayment fees together with costs savings such as fee waivers, are not included in the comparison rate but may influence the cost of the loan. Comparison rates are not calculated for revolving credit products. Rates correct as of . View disclaimer.

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