Fortnightly Repayment Plan

Paying your mortgage off every 2 weeks as your pay comes in, instead of monthly, might be a smart way you can pay your mortgage off a bit faster. This is not rocket science. Instead of making 12 monthly repayments, you make 26 fortnightly repayments each year (2 a month with a few days spare in most months), which is essentially like you paying for a 13th month each year.


Now if you take a normal 25yr mortgage and compare monthly repayments to fortnightly repayments, you actually save around 6years for your efforts. The compounded return of starting this early actually adds up to quite a bit. Let’s not forget though, you are paying more and this should be the result.


If you divide your monthly repayment in half, and pay that fortnightly, this is the result.

Let’s say you are paying $3,000 a month on your mortgage and you split this into fortnightly $1,500 payments, then your annual repayments go from $36,000 to $39,000


Here are the numbers for annual repayments

12 (months) x $3,000 = $36,000

26 (fortnights) x $1,500 = $39,000


There is a 13th ‘magical’ month. This difference is why you get your mortgage cleared 6 years sooner. If you get paid fortnightly and have worked out your budget, this should be easy enough.


One final note!

Make sure you don’t just tell your banker or broker to switch your annual repayments to a fortnightly pay cycle from monthly which is essentially taking the total amount you are already paying and splitting it into 26 fortnightly blocks instead of monthly blocks which barely makes it worth the hassle because you’re not actually contributing more. That would mean (from the example above) you would split the annual $36,000 paid into 26 and be paying $1,385 a fortnight instead of the $1,500 which is getting you the desired result of paying the mortgage off faster.