CBA borrowers benefit from fortnightly payments
Making fortnightly mortgage repayments won’t necessarily save borrowers money, new research has found.
Out of the major four banks, the Commonwealth Bank of Australia’s method for calculating interest offered the best savings for fortnightly repayments.
”Unless your lender credits you with 26 payments per year (as opposed to 24), then fortnightly payments don’t really matter,” said a banking analyst.
ANZ, NAB and Commonwealth Bank calculate fortnightly payments by dividing a monthly payment by two. However, ANZ and NAB only debit 24 fortnightly payments per year, or two payments per month.
By contrast, Commonwealth Bank credits payments every two weeks, meaning a borrower makes 26 payments in a calendar year. As a result, Commonwealth Bank customers get credit for two additional fortnightly payments every year.
Source: The Advisor