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Dollar Saver Tip #25


Save: $3,440

Tip overview:

Make fortnightly mortgage repayments instead of monthly repayments.

Richard here, Finder's home loans expert and proud — okay, struggling! — homeowner.

Like most Australians with a mortgage, my repayments have risen month after month as the Reserve Bank has lifted interest rates.

A quick trick to reduce your interest charges over time is to switch from monthly to fortnightly repayments.

Did you know?

Finder research shows 1 in 8 Australians have missed a mortgage repayment in the last 6 months.

There are 12 months in a year, so 12 monthly repayments. But there are 26 fortnights in a year.

By making fortnightly repayments you sneak in an extra monthly repayment a year. Over the life of your home loan this adds up, because the faster you repay the loan the less interest you're charged.

The average new Australian home loan is $601,252 according to the ABS. Assuming a 30-year loan term and a fairly standard (for today) 5.00% interest rate, here's what your repayments would look like:

  • Your monthly repayments = $3,288
  • Total interest over 30 years = $560,703

But what if you switched to fortnightly repayments?

  • Your fortnightly repayments = $1,614
  • Total interest over 30 years = $457,503

You'd save $103,200 in interest payments – $3,440 a year.

Just make sure your lender is calculating true fortnightly repayments rather than simply dividing up the monthly repayments. Use our fortnightly home loan calculator and try it for yourself.

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