A common misconception is that there is no difference when you make your repayments, but there are in fact a few hidden benefits to paying more frequently.
Both weekly and fortnightly repayments are better options than monthly. In fact, since interest is accrued daily, the more frequently you make your payments, the more you could save in interest over the life of your loan.
Paying fortnightly actually increases your repayments without you even knowing, effectively making twenty-six fortnightly payments which equals thirteen payments per year, rather than twelve.
Another option to consider would be to pay a little extra on top of your required minimum amount. For example:
If you have a $300,000 mortgage with an interest rate of 2.8% over 30 years, the total amount you will pay is $443,766. Your minimum weekly repayment would be $285, and your monthly minimum would be $1232. If you increase your repayments by $50.00 per week you will save a total of $22,638.00 in interest.
Also, next time you’re making a payment, take a look at your interest rate. Over the last few months we have helped many clients bring their minimum repayments down by lowering their rate.