Sep 17, 2025
Choosing fortnightly repayments instead of monthly might be the small change that creates a big impact -optimising your home loan, reducing interest and bringing you closer to financial freedom.
Understanding Fortnightly vs. Monthly repayments
First, let's break it down. A standard home loan is typically repaid monthly over 25 to 30 years, with interest calculated daily on the outstanding balance. If your monthly repayment is, say, $3,655, that adds up to 12 payments a year.
Switch to fortnightly, and you're paying half that amount around $1,828 -every two weeks. Since there are 52 weeks in a year, that means 26 fortnightly payments annually. Mathematically, 26 half-payments equal 13 full monthly payments each year. That extra "month" goes straight toward reducing your principal faster, which in turn lowers the interest charged over time. Interest on most variable and fixed-rate loans in Australia is compounded daily or monthly, so chipping away at the balance more frequently keeps those costs down.
This strategy works for both variable and fixed-rate loans, though fixed loans might have limits on extra repayments per year without penalties. Always check your loan terms with your lender/Bank.
There are 12 months in a year, which means 12 monthly payments.
But there are 26 fortnights in a year, which equals 13 monthly payments.
So, by switching to fortnightly repayments, you end up making the equivalent of an extra full month’s repayment each year—without even realising it!
Key benefits of going fortnightly
Why bother changing your repayment schedule? Here are the main advantages, tailored to the Australian mortgage landscape:
Significant interest savings: By effectively making an extra payment each year, you reduce the loan balance quicker, meaning less interest accrues. For many borrowers, this can translate to savings in the five or even six figures over the loan's life.
Shorter loan term: What might take 30 years monthly could be done in 25 or less with fortnightly payments. That's more years mortgage-free, freeing up cash for retirement, travel or investing.
Better cash flow alignment: If you are paid fortnightly -like many Australian workers -this syncs your repayments with your income, making budgeting easier and reducing the risk of missed payments.
No extra effort required: Once set up, it's automatic. Plus, in a high-interest environment these savings add up fast.
Build equity faster: Paying down your principal quicker increases your home equity, giving you more financial flexibility for future plans like renovations, investments or even accessing equity through redraw facilities.
According to financial calculators and real-world examples, the impact is clear. It's not just theory - how fortnightly repayments equate to that bonus extra month's worth annually, accelerating your path to owning your home outright.
A real-world example: crunching the numbers
Let's put this into perspective with a typical scenario. Imagine a $600,000 home loan at a 6.15% variable interest rate over 30 years - a common setup given the average new loan size is around $678,000.
Monthly Repayments: You would pay about $3,655 per month. Over 30 years, the total interest comes to approximately $715,933, with the full cost exceeding $1.3 million.
Fortnightly Repayments: Switching to $1,828 every two weeks, you would pay off the loan in just 24.4 years. Total interest drops to around $559,172 -saving you over $156,760 in interest and 5.6 years of payments.
The exact savings depend on your loan amount, rate and term, but the pattern holds: more frequent payments mean big wins.
Repayment type | Payment amount | Loan term | Total interest | Savings vs. Monthly |
Monthly | $3,655 | 30 years | $715,933 | $0 |
Fortnightly | $1,828 | 24.4 years | $559,172 | $156,761 |
Things to consider before switching
While the benefits are compelling, it's not for everyone. Fortnightly payments mean slightly higher annual outgoings (that extra "month"), so ensure your budget can handle it. If cash flow is tight, sticking to monthly might be safer.
Also, confirm with your lender -most Australian banks allow this switch without fees, but some older loans might charge for changes. For fixed-rate loans, watch those extra repayment caps to avoid penalties. And remember, if rates drop, refinancing could amplify these savings further.
Fortnightly works best for those who are paid fortnightly -it keeps everything in sync.
Additional tips to supercharge your mortgage payoff
Beyond fortnightly payments, here are a few more focused strategies:
Use an offset account: Link a transaction account to your loan to reduce the interest-bearing balance -perfect for variable loans.
Make lump-sum payments: Windfalls like tax refunds or bonuses can knock down the principal.
Refinance for better rates: Shopping around could lower your costs even more.
Weekly payments? If fortnightly feels good, weekly could save a tad more, but the difference is minimal compared to monthly.
Review your loan annually: Lenders/Banks often adjust their rates and fees. A yearly check-in with your broker ensures you are still getting the best deal.
Tools like online calculators from different websites mortgage calculator can help you model your own scenario and see the potential savings.
Common questions about fortnightly repayments
Q: Will my lender allow fortnightly payments?
A: Most Australian lenders, including major banks like Commonwealth Bank, Westpac, and ANZ, support fortnightly repayments. Contact your lender or broker to confirm, as some older loans may have restrictions.
Q: Can I switch back to monthly if needed?
A: Yes, most lenders allow flexibility to change repayment frequency, though some may charge a small fee. Check your loan contract or speak to your lender.
Q: Does this work for investment properties?
A: Absolutely! The same logic applies to investment loans, helping you pay off the mortgage faster and increase your rental yield sooner.
Ready to save on your mortgage?
Switching to fortnightly repayments is a straightforward way to take control of your home loan and build wealth faster. At Select Loan and Mortgage, we can review your current setup, calculate potential savings and guide you through the process—whether you are a first-home buyer or refinancing veteran. Contact us today for a consultation and start paying smarter, not harder. Your future self will thank you!
