Calculator Assumptions: Repayment Frequency Calculator

The figures provided should be used as an estimate only, should not be relied on as true indication of your home loan repayments, or a quote or indication of pre-qualification for any home loan product. The figures are based upon the information you put into the calculator. We have made a number of assumptions when producing the calculations including:

  • Loan term and loan amount: We assume the loan term and loan amount are what you enter into the calculator.
  • Interest rates: We assume that the rate you enter, is the rate that will apply to your loan for the full loan term – even if you choose:
    • a variable rate; or
    • o an interest only rate which, in practice, will only apply for a limited period after which a different rate will apply.
  • Interest and repayments: The displayed total interest payable is the interest for the loan term, calculated on the entered interest rate. We make the following assumptions about repayments:
    • repayments are made monthly.
    • your annual interest charge is divided equally over 12 monthly payments (in practice, interest is calculated daily and charged monthly which can lead to your interest charge varying between months).
    • interest is charged to the loan account at the same frequency and on the same day as the repayments are made (this may not be the case in practice).
    • only your initial repayment amount is calculated. We assume that this repayment amount is payable for the loan term. In practice, repayment amounts can change for a variety of reasons.
    • weekly and fortnightly loan repayment amounts are assumed to be a quarter and a half of the monthly repayment amount respectively.

if added, your extra repayment is taken to be made at the same time as your monthly repayment.

How does loan term, frequency and repayment type impact repayments?

The cost of your home loan repayments will vary depending on factors such as the length of your loan term, how frequently you make your payments, and the repayment type. A longer loan term generally means that your monthly payment would be lower but will result in a higher total loan cost, as you will be paying interest for a longer period of time. A shorter loan term means a higher repayment but a lower total loan cost, as you will be paying interest over a shorter time period.

When it comes to choosing how frequently you will pay back your loan, a weekly or fortnightly repayment can give you the benefit of saving money in interest because the interest is calculated daily and charged at the end of each month. Therefore, the more frequently you pay down the principal of the loan, the more money you save in interest over the life of your loan.

Here is a breakdown of how your loan repayment can differ depending on the frequency of your rep

$400,000 loan w/ 2.50% interest rate Monthly Fortnightly Weekly
Minimum Repayment $1,580.48 $790.24 $395.12
Total Interest Paid $168,975 $148,362 $148,230
Total Interest Paid $168,975 $148,362 $148,230
Interest Saved $0.00 $20,613 $20,745
Approximate Loan Term Saved 0 years, 0 month 3 years, 8 months 3 years, 8 months

*Note, all information in this table is indicative and for demonstrative purposes only

Why is there such a substantial difference?

The reason why paying your loan fortnightly or weekly can end up saving you a lot of money in interest, compared to paying monthly, is because in a calendar year there is only 12 monthly repayments, but 26 fortnightly repayments and 52 weekly repayments. If you are paying fortnightly or weekly, you would be paying the equivalent of 13 monthly repayments per calendar year. It is also important to remember that interest is calculated daily and charged monthly, meaning the more deposits you make to your loan, the more days your loan will have a lesser interest charged.

What is the most popular repayment frequency?

The most common repayment frequency is monthly, especially as this is the default home loan repayments quoted by lenders. Making regular repayments on the loan and paying more than the monthly minimum can make a difference to the interest charged on your loan and doing so can help you pay off your mortgage faster.

Does changing the repayment frequency change my mortgage repayments?

Most lenders will allow you to change your repayment frequency to suit your pay schedule. Having more regular loan repayment frequency can be a good way to get in an extra repayment on your mortgage, especially if you pay on a fortnightly basis.

However, the amount you pay on your loan should remain the same overall, depending on the minimum loan repayment amount listed in your loan contract. Some lenders will calculate your fortnightly repayment by dividing the monthly repayment listed in your loan contract by two, or dividing your weekly repayment by four. However other lenders may multiply your minimum monthly loan repayment by 12 to obtain the annual amount, then divide by 26 to calculate your fortnightly repayments, or divide by 52 to calculate your weekly repayments. It is important to check how your lender calculates your repayments to ensure you are maximising your savings with your preferred repayment frequency.

Do variable or fixed rates affect loan repayment frequency?

The interest rate type will have an impact on your loan repayment, but in regards to your loan repayment frequency, it is best to check with your home loan provider because some fixed rate products do not allow extra lump sum repayments. Some lenders will allow you to make fortnightly or weekly repayments on a fixed loan, while others will not.

  • Option to add an offset for 0.10%^
  • No monthly or ongoing fees
  • Unlimited redraws
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Base criteria of: a $400,000 loan amount, variable, fixed, principal and interest (P&I) home loans with an LVR (loan-to-value) ratio of at least 80%. However, the ‘Compare Home Loans’ table allows for calculations to made on variables as selected and input by the user. All products will list the LVR with the product and rate which are clearly published on the Product Provider’s web site. Monthly repayments, once the base criteria are altered by the user, will be based on the selected products’ advertised rates and determined by the loan amount, repayment type, loan term and LVR as input by the user/you. Rates correct as of 6 March 2024.

^The addition of offset sub-account means your comparison rate will change.

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