Pay your loan off quicker with fortnightly or weekly repayments

Wed, 25 Feb 09

your loan off quicker with fortnightly or weekly repayments

Dividing your minimum monthly repayment into two fortnightly or four weekly payments can reduce the term of your loan in two ways:

• because there are more than two fortnights or four weeks in every month, dividing your original monthly repayment into two or four means you actually pay more over the course of a calendar month.
  
• when interest is calculated daily, the more frequent repayments result in less interest being charged to your loan over the course of a month.

But watch out. If requesting fortnightly or weekly repayments, make sure you specifically ask your lender to halve or quarter the monthly repayment. Unless you ask them, many lenders these days will just calculate the more frequent repayment on the basis of the minimum required fortnightly or weekly repayment, delivering very little extra repayment advantage.

Absolutely right and this simple method of paying off a home loan quicker is overlooked by many.

Posted by refinancing on Sun, 25 Jul 10 - 12:00am