I'm having a read of the difference between the two and understand the benefit of paying fortnightly. But does this matter if you are paying interest only? Is there still a benefit if my goal is to pay IO on my PPOR and move out in the near future, lease old PPOR and claim full tax deduction on interest payment?
Monthly or fortnightly loan repayments
- Thread starter grantwhit
- Start date
I get paid fortnightly and my rents come in fortnightly, so I prefer paying my mortgages fortnightly as well. It makes money management a bit easier, otherwise there's not much difference.
They made it out to be a great way to cut your mortgage if you're paying P&I as they would just cut the monthly repayments in half and pay them fortnightly. As there are 26 fortnights in a year but only 12 months, it meant that you were paying down the principal quicker.
They made it out to be a great way to cut your mortgage if you're paying P&I as they would just cut the monthly repayments in half and pay them fortnightly. As there are 26 fortnights in a year but only 12 months, it meant that you were paying down the principal quicker.
If you see a fortnightly payment as half a monthly payment, yes it does make a significant difference, if you see it as 46% then it won't.
And if you are using a 100% offset account it makes absolutely no difference what so ever.
coz interest is calculated daily , and so you are paying daily : )
As has already been alluded, true fortnightly will chew into the principal quickly.............if you are paying 8% more than you need to of course the loan will be repaid more quickly.
ta
rolf
thats my point normally selecting a weekly, fortnightly or monthly payment you basically end up paying the same amount over the year
so at the end of a 30 year term it really only equates to a couple of $1000
if you see it as any other way your just paying extra repayments?
Yes, this is the same as extra payments. But while you're only paying an extra 8% a year, it does make a big difference on the life of the loan. With a 30 year loan in the first few years the vast majority of the money you're paying actually goes to repaying the interest and only a small fraction repays your principal. So if you make additional payments to the principal in the order of 8% does become significant. It might wipe 5 years of your loan.
does this mean the repayments are not recalculated if you switch to fortnightly? and just halved?
as selecting these options in an online calculator doesnt seem to affect it much at all
