Do you pay loan weekly/fornightly/monthly/yearly?

In that case yes, the more often you make payments, the more $'s that will come off the principal of the loan if you're paying P&I. It's a strategy many use for their PPOR.
 
hmmmm there you've got me. I've never really heard of it being used with IO loans. Someone smarter than me with a calculator could probably work out if it's better for you, but I wouldn't think it would make too much of a difference.
 
In theory, the balance would come down during the month if you pay extra before the interest is taken out wouldn't it? But then you may also start muddying up the waters when it comes to tax time, so you'd want to tread carefully.

Thinking about it, I don't think it will save you much interest even if you did attempt it. You couldn't pay more into the loan each month than interest amount for that period as it would be considered a principal reduction - so the most it will save you is the % interest rate you pay on one payment for the year. eg. if your loan payment IO per month is $1,000 and your rate is 6% - the whole procedure, even if you paid that $1k into the loan each month the day after the interest was charged and therefore had it sitting there the whole 30days is $1,000 x 6% = $60.

If my figures above are correct (anyone??), don't waste your time.
 
opps, edit to add:
based on interest is calculated daily, would it save us more $$$ by paying weekly?

If you have a P&I loan, paying the minimum repayment weekly is better, because you are charged interest monthly, but it is calculated daily.

Also, there are 52 weeks in a year, but if you pay monthly there are only 48 weeks in your repayment year, so you will be paying off an extra month's repayments per year.

If you can add an extra $50 per week to your weekly P&I repayments you will pay out your loan many years earlier. ;)

Just another little trick most people don't know about.

Have a play with this:
http://www.commbank.com.au/tools/homeloancalc/results.asp
 
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Fortnightly for one, monthly for the other, but we stagger our payments to the pointless account they made us get just to take our loan payments out of so we pay into there weekly.

If I put $50pw extra into my smaller loan the bloody thing would probably end up getting paid out in 5 years ...
 
If you have a P&I loan, paying the minimum repayment weekly is better, because you are charged interest monthly, but it is calculated daily.

Also, there are 52 weeks in a year, but if you pay monthly there are only 48 weeks in your repayment year, so you will be paying off an extra month's repayments per year.

If you can add an extra $50 per week to your weekly P&I repayments you will pay out your loan many years earlier. ;)

Just another little trick most people don't know about.

Have a play with this:
http://www.commbank.com.au/tools/homeloancalc/results.asp

I remember just after we bought our first PPOR (1986) there was a book advertised showing how to cut years off your loan. It had calculations showing paying fortnightly VS paying monthly, plus how putting a little extra saved loads.
I was amazed. I still have it (even though the net is easier now).

I think most people know about this now. The offset loan thing is something not a lot of people are aware of though (and the advantages of it). And that can be really useful to many. My daughter dreamed of buying her first PPOR and paying a HUGE deposit. I sorted her out.:D
 
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