loan repayments weekly, fortnightly or monthly

Discussion in 'Property Finance' started by tj22, 17th Jun, 2015.

  1. tj22

    tj22 Member

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    so my question is should i have my loan repayments made weekly or monthly?

    i was thinking monthly from a bookkeeping point of view.

    but then weekly repayments would be saving me interest on the loan as it has less time to compound.

    what do you guys do?
     
  2. jerrybee

    jerrybee Member

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    The more frequent the better, but most won't let you do less than a month for IO I think.
     
  3. The Y-man

    The Y-man Member

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    Question does not compute - what repayments? :confused:;)


    You would not be asking that question if you had an IO (or P&I) with offset. With offset, you would put ANY spare cash in straight away to minimise your interest immediately.

    The Y-man
     
  4. Terry_w

    Terry_w Member

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    Lenders calculate interest daily and add it to the loan once per month. If you have a 100% offset account the savings in the offset offsets the daily interest so it would not make any difference if you are paying weekly or monthly.

    In the old days there were no offsets and people just paid monthly. Then someone come up with the idea of paying fortnightly - these saves a bit of interest but the real effect is that you pay 13 months worth of repayments each year instead of 12 so the extra repayment is what is the main reducer of the loan.
     
  5. tj22

    tj22 Member

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    loan is with cba 4.39% loan amount is 160k 80% lend.

    p&i with a redraw facility. so yea i'll probs just pay weekly then.

    Cheers all
     
  6. Terry_w

    Terry_w Member

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    If no offset and it is non deductible just get part of your pay directed to the loan account. Saves the need to transfer and will save you a few days interest each week - compounding effect
     
  7. Peter_Tersteeg

    Peter_Tersteeg Finance broker/strategist

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    If it's an interest only loan, you don't have a choice. Monthly repayments are the only option available.

    An offset account will negate the benefits of weekly or fortnightly payments.