Should I pay weekly, fortnightly or monthly?
Some people think that paying weekly or fortnightly saves on interest costs.
This isn’t true. The difference is insignificant.
Why do people think this?
Some people think your fortnightly mortgage payment will be half the monthly payment.
This is because there are 26 fortnights in a year, and 12 months.
Some people think they make an extra 2 repayments per year if mortgages are paid fortnightly.
It doesn’t work like this in real life. Because if you go to the bank and ask to pay your loan fortnightly, they don’t half your monthly repayment. They’ll cut it by more than half.
That’s because there is an average of 4.33 weeks in a month, not 4.
Think about it another way – people who get paid monthly don’t get paid less than people paid fortnightly.
So setting the frequency of your mortgage repayment often depends on convenience.
If you get paid weekly, then making weekly mortgage payments makes sense.
If you get paid monthly, it makes sense to pay the mortgage every month.
To be clear, making extra repayments against your mortgage will pay it down faster. But, solely switching to a monthly or fortnightly repayment? That makes very little difference.