Weekly and Fortnightly Repayments vs. Monthly Repayments
We’ve all heard of different ways to pay off your mortgage quicker, however one of the more effective ways of doing this is by making your repayments either weekly or fortnightly. For most people this is their preferred way of repaying, as their pay is either weekly or fortnightly. Why you ask? Essentially mortgage repayments are based on monthly repayments. Paying fortnightly is simply paying the equivalent of half of your monthly repayments every two weeks.
For example, you have a loan of $300, 000.00 charged at 5 per cent over 30 years.Your monthly principle and interest repayments would be $1,611.00 with an annual repayment of $19,332.00
If your bank calculates your 26 fortnightly repayments by halving your monthly repayments, you’ll pay $805.50 every second week for an annual repayment of $20,943.00. This essentially is an extra payment of $1,611.00 a year.
Making weekly or fortnightly repayments is definitely one of the smarter ways of managing your home loan.