Switching from monthly to fortnightly repayments is one of the easiest ways to save tens of thousands of dollars on your mortgage — and most borrowers have no idea it works or why.
Here's the full explanation, with the actual numbers — and the trap that catches people out.
It's not magic — it's maths. Here's the key insight:
There are 12 months in a year, but 26 fortnights. If you pay half your monthly repayment every fortnight, you end up making the equivalent of 13 monthly repayments in a year instead of 12. That one extra payment goes straight off your principal every year — and since interest is calculated on your outstanding balance, a lower balance means less interest every single day after that. The effect compounds over 30 years into tens of thousands of dollars.
| Repayment Type | Payment Amount | Total Interest Paid | Loan Paid Off In |
|---|---|---|---|
| Monthly | $3,451/month | $642,360 | 30 years |
| Fortnightly | $1,726/fortnight | $578,200 | 27 years 1 month |
| Weekly | $863/week | $576,800 | 27 years 0 months |
Based on $600,000 loan at 6.00% p.a. over 30 years. Figures are illustrative.
💰 Result: $64,160 saved in interest, and you own your home almost 3 years earlier — just by changing when you pay, not how much per payment.
The saving isn't linear — it accelerates over time. Here's why: in year one, fortnightly repayments reduce your principal by roughly one extra monthly payment ($3,451 on the above example). That means in year two, your starting balance is lower, so interest charges are slightly lower, meaning slightly more of each payment goes to principal. This compounds year after year.
By year 10, the difference in outstanding balance between monthly and fortnightly repayments on a $600,000 loan is approximately $35,000. By year 20, it's roughly $55,000. The borrower on fortnightly repayments effectively has a significantly smaller loan for the entire life of the mortgage.
Technically yes — there are 52 weeks in a year, so weekly repayments (at one quarter of your monthly amount) give you the equivalent of 13 months of payments too. In practice, the difference between weekly and fortnightly is tiny — roughly $1,400 in total interest savings on the above example. Most people find fortnightly easier to manage because it aligns with pay cycles and is simpler to track.
Watch out for this — it catches many borrowers. Some lenders offer "fortnightly" repayments that are simply your monthly payment divided by two, then debited 24 times a year (not 26). This doesn't give you the extra payment benefit — you end up paying exactly the same total amount as monthly, just more frequently.
True fortnightly repayments = monthly repayment ÷ 2, paid 26 times per year. Always confirm with your lender which method they use before assuming you're getting the benefit. Ask them specifically: "Are my fortnightly repayments debited 24 or 26 times per year?"
It depends on your specific fixed loan terms. Many fixed rate loans restrict extra repayments — some cap them at $10,000 per year. Since true fortnightly repayments effectively make extra principal payments (one extra monthly payment per year), they may be counted toward that cap.
Check with your lender before switching to fortnightly on a fixed loan. If the cap is an issue, consider switching to fortnightly the moment your fixed period ends and the loan reverts to variable.
The same effect can be achieved manually on a monthly loan — simply make one additional payment per year that equals your regular monthly repayment. You get the same principal reduction without needing to formally change your repayment schedule. Many borrowers do this by splitting their tax refund and putting it straight onto the mortgage.
Use our free repayment calculator to compare monthly, fortnightly, and weekly options on your specific loan amount and rate — see exactly how much you'd save.
Yes — you need to contact your lender or log into your online banking and change the repayment frequency. It's usually straightforward and takes a few minutes. Confirm they'll debit 26 payments per year, not 24.
No. Changing your repayment frequency is an internal account change — it doesn't appear as a new credit enquiry and doesn't affect your credit file in any way.
You can still choose fortnightly repayments — the debit will just come out of your account regardless of when you're paid. You'll need to ensure your account has sufficient funds on the debit date. Some people on monthly pay find it easier to make one extra voluntary payment per year instead, which achieves a similar result.
The only practical downside is slightly reduced cash flow flexibility — you're committing to a slightly higher total annual payment. But since the extra annual amount equals roughly one monthly repayment spread over 26 payments, most borrowers don't notice the difference in day-to-day budgeting.