Mortgage Make fortnightly payments to reduce your mortgage

Make fortnightly payments to reduce your mortgage

By: Ben Hamilton, Tue Dec 5th, 2006

Time flies. Have you ever caught yourself wishing for more than 24 hours in a day? Visualise how having more time to generate more often refunds could diminish the value of your mortgage.

Creating fortnightly rather than monthly payments indicates you could significantly reduce the term and cost of your mortgage over the long term. How? It's easy. Everyone knows there are only 12 months in a year, but did you understand there are 26 fortnights? If you divide your monthly payment in two and make payments every fortnight, this is the equivalent of Making 13 monthly payments every year.

Some experts call this eating the elephant one bite at a time. Realizing the switch to fortnightly repayments means that your 'bites' are small affordable reimbursements that can be achieved and assist to completing something much larger, in this case - paying off your home loan.

In fact, what if you could efficaciously add weeks to a year? The good news is that it's much easier than you expect. Anything it takes is this one small exchange that can have a massive impact on your finances: simply switch your repayments from monthly to a fortnightly basis.

In a way, arranging fortnightly mortgage repayments is like strained saving, as the repayments are produced from your bank report previously you have a opportunity to consume that money on other costs. Too, knowing that you are Doing an extra month's payment each year through fortnightly payments will give you peace of mind that you're doing as much as you can to pay off your home loan as soon as possible.

So, if fortnightly repayments equate to an extra month's payment over a year, then weekly payments have to be even better, correct? In reality, paying your mortgage in weekly installments may help marginally but it won't realize much more in savings. The most noticeable discrepancy you can execute is to change from monthly to fortnightly repayments.

Over the long term, Realizing fortnightly repayments means that you could slash up to tens of thousands of dollars from your mortgage payments, and cut the term of your loan by several years.

In terms of your disposable income, the difference would painfully be obvious, but in the long term the advantages are immense. It's definitely anything to suppose about later time you find yourself checking the clock.