How often can you make repayments on home loans?
Many home loans have monthly repayments by default. But most lenders offer the option to make repayments weekly, fortnightly or monthly.
However, if you use most mortgage calculators, including Canstar’s, which you can access here, whether you choose to pay your mortgage monthly, fortnightly or weekly makes very little difference to your overall interest payments.
For example, if you have a $600,000 mortgage at 5.68% over 25 years, if you pay monthly the amount of interest you’ll pay over the term of the loan is $524,790.
And if you pay weekly, you’ll pay $523,864 … that’s a whopping saving of, drum roll please: $926 over 25 years, or $37.04 per annum!
So what’s going on? What about the advice to pay weekly or fortnightly, instead of monthly? And where did the thousands of dollars of saved interest repayments go? The answer is in the finer details of how much you’re actually repaying.
Weekly vs monthly mortgage repayments
When banks, and most mortgage calculators, work out the difference between monthly and weekly repayments, they take your total annual repayments and divide them by either 12, for monthly, or 52 for weekly.
Working with our example above – $600,000 mortgage at 5.68% over 25 years:
- Monthly repayments of $3749 x 12 months = $44,988 p/a
- Weekly payments of $865 x 52 week = $44,980 p/a
In essence, you’re paying the same amount, just divided differently. You pay a fraction more, but not much, hence the paltry saving of $926 over 25 years.
To reduce your interest charges, you’ve got to pay off more of your mortgage more frequently. And this is the crux of the weekly/monthly payment argument. To achieve the savings promised by those promoting weekly or fortnightly payments, you’ve got to use the monthly payment of $3749 above as your starting point, not the annual total:
- Monthly repayments = $3749
- Monthly repayment ($3749) ÷ 4 = $937.25 per week
- Annual total ($937.25 per week x 52) = $48,737
Using this method, you end up paying an extra month’s worth of repayments per year. And it can shave years off the term of your home loan and save you tens of thousands of dollars in interest repayments:
| Savings From Increasing Home Loan Repayment Frequency | |||
| Monthly Repayments | Fortnightly Repayments | Weekly Repayments | |
| Repayment Amount | $3749 | $1875 | $937 |
| Total Paid Per Year | $44,988 | $48,737 | $48,737 |
| Extra Paid Per Year | – | $3749 | $3749 |
| Total Interest Payable Over Loan Term | $524,790 | $427,842 | $426,779 |
| Interest Saved Over Loan Term | – | $96,948 | $98,011 |
| Time Saved | – | 4 Years 1 Month | 4 Years 1 Month |
| Source: www.canstar.co.nz – 03/02/2025. Average interest rate of 5.68% based on owner occupier 1-year fixed-rate mortgages on Canstar’s database available for a loan amount of $600,000, 80% LVR and principal & interest repayments; excluding introductory and first home buyer only loans. Calculations assume a $600k loan over a 25-year term. Fortnightly and weekly repayments calculated as half and a quarter of monthly repayments. | |||
How do you switch from monthly to weekly repayments?
You’ll need to check whether your lender offers the payment frequency you desire, for example weekly or fortnightly. Also confirm whether they calculate fortnightly payments as half a monthly payment, paid fortnightly (which saves you interest), or as your total annual amount divided by 26 fortnights (no interest savings). And check whether any additional fees apply if you choose to make repayments more frequently and pay your mortgage off faster.
If your mortgage is up for refixing, why not ask for a lower interest rate? Chances are you’re switching repayment frequency because you want to save money, and there’s no time like the present to negotiate a better deal.
About the author of this page
Bruce Pitchers is Canstar NZ’s Content Manager. An experienced finance reporter, he has three decades’ experience as a journalist and has worked for major media companies in Australia, the UK and NZ, including ACP, Are Media, Bauer Media Group, Fairfax, Pacific Magazines, News Corp and TVNZ. As a freelancer, he has worked for The Australian Financial Review, the NZ Financial Markets Authority and major banks and investment companies on both sides of the Tasman.
In his role at Canstar, he has been a regular commentator in the NZ media, including on the Driven, Stuff and One Roof websites, the NZ Herald, Radio NZ, and Newstalk ZB.
Away from Canstar, Bruce creates puzzles for magazines and newspapers, including Woman’s Day and New Idea. He is also the co-author of the murder-mystery puzzle book 5 Minute Murder.
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