Fortnightly repayments save money only if you pay half your monthly repayment every fortnight. Because there are 26 fortnights in a year, that adds up to 13 monthly repayments instead of 12. On a $600,000 loan at 6.63%, it cuts about six years off a 30-year loan and saves around $184,000 in interest. Simply splitting the same yearly total into fortnightly payments saves very little, so the extra repayment is what does the work.
How home loan interest is charged
Most Australian lenders calculate interest daily on your outstanding balance and charge it to the loan monthly. Every repayment reduces the balance straight away, so the sooner and more often money goes in, the less interest is charged. That’s the small benefit of paying more often. The big benefit comes from paying more in total.
Monthly, fortnightly and weekly compared
| Repayment option | Amount | Paid per year | Loan paid off in | Interest saved vs monthly |
|---|---|---|---|---|
| Monthly | $3,844 | $46,128 | 30 years | Nil |
| Fortnightly (yearly total divided by 26) | $1,774 | $46,128 | About 30 years | About $2,000 |
| Fortnightly (half the monthly amount) | $1,922 | $49,972 | About 24 years | About $184,000 |
| Weekly (quarter of the monthly amount) | $961 | $49,972 | About 24 years | About $185,000 |
Our calculations for a $600,000, 30-year principal and interest loan at 6.63%, the average variable rate according to Canstar as at 2 October 2026. Excludes fees.
The table shows the real driver: half-monthly fortnightly repayments add one extra monthly repayment a year, about $3,844. That extra money goes straight off the balance, so you pay less total interest and shorten the loan term. Weekly repayments at a quarter of the monthly amount give almost the same result.
Why it works so well
- An extra repayment each year, taken in small amounts you barely notice.
- Earlier reduction of the balance. Money paid mid-month starts saving daily interest straight away.
- It matches how many people are paid. If your salary arrives fortnightly, repayments come out the same day and you’re less tempted to spend the money.
Fortnightly repayments vs other strategies
Paying an extra month a year is one way to pay off your loan faster. Two alternatives work in a similar way:
- Extra repayments. Adding $320 a month to a monthly repayment has almost exactly the same effect as half-monthly fortnightly payments.
- An offset account. Keeping savings in an offset reduces interest at your loan rate while keeping the money available. Combining an offset with fortnightly repayments gives you both.
Model your own loan with our mortgage calculator.
How to switch
- Check your lender’s options. Most variable loans allow weekly, fortnightly or monthly repayments, changeable online or with a phone call.
- Ask how the fortnightly amount is calculated. Some lenders default to the yearly total divided by 26. Ask for half your monthly repayment instead, or set up an extra payment yourself.
- Check fixed loan limits. Fixed loans often cap extra repayments each year. A half-monthly fortnightly schedule adds about $3,800 a year on a $600,000 loan, which is usually within the cap, but check.
- Line it up with your pay. Schedule repayments for the day after your salary arrives.
Things to consider
- Cash flow. You’re paying more each year, so make sure your budget can handle it, especially with rates rising in 2026.
- Investment loans. If the loan is for an investment property, it’s usually better to put spare cash against a non-deductible home loan first.
- Rate matters more. A lower rate saves more than repayment frequency. Check you’re on a competitive rate first.
Frequently asked questions
Do fortnightly repayments really save money?
Yes, if you pay half your monthly repayment every fortnight. That adds up to one extra monthly repayment a year, which on a $600,000 loan at 6.63% saves around $184,000 and repays the loan about six years early. If your lender just divides the same yearly total by 26, the saving is only about $2,000.
How do lenders calculate interest on home loans?
Most lenders calculate interest daily on the outstanding balance and charge it to the loan once a month. Because the balance used is the daily balance, any repayment or offset deposit reduces interest from the day it arrives.
Can I change my repayment frequency?
Usually, yes. Most lenders let you switch between weekly, fortnightly and monthly repayments online or by contacting them, at no cost. Check how they calculate the fortnightly amount, and on a fixed loan check whether the higher yearly total exceeds any extra repayment limit.
Sources
- Canstar, Average home loan interest rates, as at 2 October 2026
- ASIC Moneysmart, Pay off your mortgage faster
- ASIC Moneysmart, Mortgage offset accounts
General information only. It does not consider your objectives, financial situation or needs and is not credit, tax or financial advice.