Let me let you in on one of the mortgage world’s worst-kept secrets: you can pay off your loan faster without changing your budget — if you switch to fortnightly repayments. Sounds like marketing spin, doesn’t it? But this strategy is not a gimmick. It’s simple math, and when done correctly, it can cut years off your loan and save you tens of thousands in interest.
And yet, almost nobody understands how or why it works — or worse, they’re doing it wrong.
Let’s fix that.
The Psychology of Pay Cycles
Most Australians get paid fortnightly. So the idea of synchronising your mortgage repayments with your income makes perfect sense. It feels more manageable. More frequent payments mean smaller bites. You don’t feel the sting of a big monthly debit, and your cash flow stays smoother.
But that’s not the real advantage.
The real power lies in what happens when you make 26 fortnightly payments per year instead of just 12 monthly payments.
Let me explain. Let’s say you have:
A $700,000 mortgage At an interest rate of 5.8% on a standard 30-year term. Your monthly repayment will be around $4,100.
So over a year, you pay: 12 × $4,100 = $49,200
Now, what happens if you split that monthly repayment in two, and pay $2,050 every two weeks?
26 × $2,050 = $53,300
You’ve just made an extra $4,100 payment per year — the equivalent of one full monthly repayment, without lifting a finger.
The Result?
By paying that extra $4,100 each year, you’re aggressively paying down the principal, which:
- Reduces the interest charged (because interest is calculated on the balance)
- Shortens the loan term (sometimes by 4–6 years or more)
- Saves a small fortune in interest
Let’s look at the numbers.
- Total interest: ~$541,000
- Loan term: 30 years
If you switch to fortnightly repayments (structured correctly):
- Loan paid off in: ~25.6 years
- Interest saved: ~$92,000
All for doing what feels like less.
Not All Fortnights Are Created Equal
Now, here’s the catch — and it’s a big one.
Some lenders offer a “fortnightly” repayment option where they take your annual repayment amount and divide it by 26.
It looks like you’re paying fortnightly, but you’re actually paying exactly the same amount over the year — no extra repayment. No accelerated payoff. Just more frequent transactions.
This will not help you pay off your loan faster.
To get the benefit, you must take your full monthly repayment, divide it in half, and pay that amount every two weeks. That way, you sneak in one extra month’s repayment each year, which makes all the difference.
Real-Life Example
Let’s meet Sarah and Tom.
They have a $600,000 loan, a 5.5% interest rate, and 30 years ahead of them.
- Monthly repayment: $3,407
- Fortnightly repayment (half of that): $1,703.50
- Annual overpayment by switching to fortnightly: $3,407
They stay on budget. No pain. No lifestyle changes.
But the impact?
- Loan term reduced to ~25.5 years
- Interest saved: $87,000+
That’s the kind of outcome you’d expect from refinancing, budgeting, or a generous inheritance — but here, it’s achieved purely through timing.
Why Does This Work?
Because home loan interest in Australia is calculated daily and charged monthly, frequent payments chip away at the principal sooner — and reduce the daily interest that accrues. Every extra dollar paid early has a compound effect.
What Comes Next?
This is the lowest-effort, highest-impact trick in the mortgage playbook — if your lender allows it, and you set it up right.
If you’re taking to your lender directly, ask whether your fortnightly payments are just “frequency conversions” or if they actually lead to 13 full monthly repayments per year. We’ll obviously do this for all our clients, so no need to stress.
If they don’t — ask if you can manually set a recurring extra repayment every year to match that extra month.
Don’t overcomplicate it. Don’t wait for rates to drop or for your income to rise.
You can start this strategy today, without changing your budget.
