Switching from monthly to fortnightly loan repayments can help reduce the loan term and total interest paid over the life of a loan.
Changing how often you repay a loan can make a meaningful difference over time. Many borrowers repay monthly, but switching to fortnightly repayments can help reduce both the loan term and the total interest paid. The reason is simple arithmetic: there are twelve months in a year but twenty-six fortnights, so if you pay half the monthly amount every fortnight you effectively make the equivalent of thirteen monthly payments a year rather than twelve. That extra contribution chips away at the loan principal, and because interest is generally calculated on the outstanding balance, a lower balance means less interest accruing over the life of the loan.
The actual benefit depends on your loan size, rate, term, and lender's repayment rules, so the impact varies from one situation to the next. AeFin can model how a fortnightly approach might work for your particular loan. Book a strategy session and we'll run through the numbers with you.