Fortnightly vs monthly repayments
Fortnightly repayments save money only when the fortnightly amount is half the monthly repayment, because 26 half-payments a year is 13 monthly repayments, one more than the calendar requires. Converted properly to a true fortnightly figure, you pay the same amount a year and save almost nothing. This guide shows both on a $600,000 loan, gives you a tool to run your own numbers, and explains what lenders publish about which figure they use.
- Half-monthly fortnightly (monthly repayment divided by two) on a $600,000 loan at 6% over 30 years clears the loan in about 24.5 years and saves roughly $149,000 of interest
- True fortnightly (monthly times 12, divided by 26) pays the same per year and finishes in the same 30 years; Unloan publishes the warning to check the maths
- Weekly at a quarter of the monthly amount does the same as half-monthly fortnightly, plus a small daily-interest gain
- Interest is calculated daily on almost all home loans, so timing within the month helps a little; the extra payment a year is the real saving
- With a full offset, the offset balance does the work; align the repayment to payday and leave salary in the offset
WARNING: This comparison rate is true only for the example given and may not include all fees and charges. Different terms, fees, or other loan amounts might result in a different comparison rate. Comparison rates are based on a secured loan of $30,000 over 5 years for vehicle finance and $50,000 over 5 years for equipment finance, as required under the National Credit Code.
Why fortnightly repayments can save money
There are 12 months in a year and 26 fortnights. If your lender takes half your monthly repayment every fortnight, you make 26 half-payments, which is 13 full monthly repayments, one more than a monthly schedule. That extra repayment comes straight off the principal every year, and because interest is calculated daily on the balance, every later day is charged on less. That is the whole mechanism. Moneysmart's pay-off-faster guide and the ABC's coverage describe it the same way.
The catch is the word "half". Some lenders calculate the fortnightly repayment properly: the annual amount divided by 26. That figure is about 7.7% lower than half the monthly amount, you pay exactly the same each year, and the loan finishes in the same 30 years. Unloan publishes the warning plainly: depending on how the figure is set, paying fortnightly may not offer as much of a saving as you were hoping for, so check the maths before going ahead.
Worked example: $600,000 at 6% over 30 years
| Schedule | Repayment | Paid a year | Paid off in | Total interest |
|---|---|---|---|---|
| Monthly | $3,597 a month | $43,168 | 30 years | About $695,000 |
| True fortnightly (monthly × 12 ÷ 26) | $1,660 a fortnight | $43,168 | 30 years | About $694,000 |
| Half-monthly fortnightly (monthly ÷ 2) | $1,799 a fortnight | $46,765 | About 24.5 years | About $546,000 |
The half-monthly schedule pays $3,597 more a year, which is exactly one extra monthly repayment, and saves roughly $149,000 of interest and five and a half years. The true fortnightly schedule saves about $1,000 over the whole loan from the slightly earlier timing of each payment. Run your own figures below.
| Schedule | Repayment | Paid off in | Total interest | Saving |
|---|---|---|---|---|
| Monthly | $3,597 a month | 30.0 years | $695,029 | $0 |
| True fortnightly (monthly x 12 / 26) | $1,660 a fortnight | 30.0 years | $693,292 | $1,737 |
| Half-monthly fortnightly (monthly / 2) | $1,799 a fortnight | 24.5 years | $546,157 | $148,872 |
What lenders publish about repayment frequency
ANZ Plus publishes that fortnightly repayments are required every 14 days and fall on the same weekday every two weeks, and that smaller repayments made more often may be easier to manage. Unloan publishes the pros and cons of each schedule and that weekly and fortnightly deliver a similar interest saving, with the caveat above about how the fortnightly figure is calculated. Savings.com.au and InfoChoice, the two comparison sites ranking for this question, both reach the same conclusion: the saving comes from the thirteenth payment. What none of them say is which figure your lender will use, so ask before you switch, or compare the fortnightly amount your lender quotes with half your monthly repayment. If it is smaller, you have the true fortnightly figure and no head start.
Fortnightly, extra repayments or offset?
All three reduce the balance the daily interest is charged on. Half-monthly fortnightly is an extra repayment that does not feel like one, which is its appeal. A deliberate extra repayment of any size does the same thing more flexibly; the extra repayment calculator shows the saving for any amount. An offset account does it while keeping the money accessible, which is why for a property that could become an investment, offset beats paying down the loan; the offset vs redraw guide explains the tax reason. If you are on a fixed rate, the extra payment a year counts towards the lender's cap on extra repayments (NAB publishes $20,000 per fixed period, St.George and BankSA $30,000), so check the cap before switching a fixed split to half-monthly fortnightly.
When frequency is the wrong lever
If your rate is well above what a new lender would offer, the thirteenth repayment is worth less than the rate cut. On $600,000, a rate 0.5 percentage points lower saves about $3,000 a year in interest without any extra cash, and on the same remaining term it finishes the loan earlier too. The refinancing guide covers the switching costs and the cashbacks that offset them. A broker can run the frequency change and the refinance side by side, and Your Finance Guide refers you to one licensed broker partner for that; we do not lend or assess applications ourselves.
Paying off the loan faster
The calculators and the features that actually move the balance.
Fortnightly vs monthly FAQs
Is it better to pay my mortgage every 2 weeks or monthly?
How do I cut 10 years off a 30-year mortgage?
Is it better to pay fortnightly or monthly with an offset?
Does paying weekly save more than fortnightly?
Do all lenders let me choose the frequency?
Does repayment frequency affect how interest is charged?
Pay it off faster, the right way
Tell us your loan, rate and how you are paid, and we refer you to one licensed broker partner who compares a frequency change, extra repayments, an offset and a refinance on total interest. Free for borrowers, no obligation.