Fortnightly repayments: frequency and extra payments
Changing frequency recalculates the payment. Paying half the monthly amount each fortnight adds extra payments. The calculator example separates the two.
On this page
- Calculation
- Mortgage repayment calculator
- Interest model
- Equal periods, not daily accrual
- Payment frequency
- 26 fortnightly or 12 monthly periods a year
- Example status
- Computed scenario, not a lender offer
What the calculation models
The money.financial calculator calculates principal-and-interest repayments at a regular frequency. It divides the annual interest rate evenly across the selected number of periods and calculates the payment needed to repay the loan over the entered term. This is a periodic model, not a simulation of a lender's daily interest calculation or payment-processing dates. Money Financial, mortgage repayment calculator (opens in a new tab).
The worked example below uses the money.financial calculator. Its loan amount, rate and term are assumptions for illustration, not a lender offer or a published market rate. Changing the frequency recalculates the payment for the same assumed loan term. Money Financial, mortgage repayment calculator (opens in a new tab).
A computed comparison with the same loan term
Worked example using the money.financial calculator. For an assumed $750,000.00 loan at 5% a year over 30 years, the calculator returns a monthly payment of $4,026.16 and total interest of $699,418.38. With fortnightly frequency, it returns a payment of $1,857.33 and total interest of $698,718.83. Both scenarios retain the same term. These are separately calculated payments, rather than a monthly payment divided in half. Money Financial, mortgage repayment calculator (opens in a new tab).
Half the monthly amount is a different schedule
The calculator uses 26 fortnightly periods or 12 monthly periods per year. Paying half a monthly amount at each of those fortnightly periods makes 13 monthly amounts' worth of payments, rather than 12. That schedule commits more money over the year. Its result cannot be described as a saving caused by frequency alone. Money Financial, mortgage repayment calculator (opens in a new tab).
The computed comparison above does not model that half-monthly schedule. It uses the calculator's recalculated fortnightly payment. A comparison of extra repayments needs an amortisation calculation that explicitly includes the extra amount, rather than treating every fortnightly payment as half a monthly payment. Money Financial, mortgage repayment calculator (opens in a new tab).
What the example leaves out
The example assumes a constant rate for the full term, regular principal-and-interest payments and no fees, extra repayments, redraws, offsets, payment holidays or balloon payment. It does not model daily accrual, changing rates, lender processing delays, prepayment restrictions or interest-only arrangements. Those omissions limit what the comparison says about a real loan. Money Financial, mortgage repayment calculator (opens in a new tab).
Payments, interest and totals are rounded separately for display. The calculation uses unrounded payments internally, so multiplying the displayed payment by the payment count may not reproduce the displayed total. The result is an estimate under the stated contract, not a lender cash-flow schedule or a guarantee of savings. Money Financial, mortgage repayment calculator (opens in a new tab).