When you're considering refinancing your home loan, one aspect that often gets overlooked is how frequently you make repayments. Many NSW homeowners focus solely on accessing a lower interest rate but miss out on the potential savings that come from adjusting their payment frequency. As experienced Mortgage Brokers, we've seen how the right payment schedule can make a substantial difference to your financial situation.
Understanding Payment Frequency Options
Most lenders offer several repayment frequency options when you refinance:
• Monthly payments - The standard option that most borrowers choose
• Fortnightly payments - 26 payments per year instead of 12
• Weekly payments - 52 payments per year
• Bi-monthly payments - Six payments per year (less common)
Each option affects how much interest you'll pay over your loan term and how quickly you'll pay off your mortgage.
How Fortnightly and Weekly Payments Can Save You Money
When you switch from monthly to fortnightly payments, you're essentially making 26 payments per year instead of 12. This means you're making the equivalent of 13 monthly payments annually rather than 12. The extra payment goes directly towards your principal, which can significantly reduce loan repayments over time.
For example, if your monthly repayment is $2,400, switching to fortnightly payments of $1,200 means you'll pay an extra $2,400 per year towards your principal. Over the life of your loan, this could save you tens of thousands in interest payments and reduce your loan term by several years.
Refinancing Payment Frequency During Your Fixed Rate Period Ending
If your fixed rate period ending is approaching, this presents an ideal opportunity to reassess your payment structure. Many borrowers focus on securing another fixed interest rate or switching to a variable interest rate, but don't consider how payment frequency fits into their refinancing strategy.
When you refinance, you have the chance to:
- Access loan options from banks and lenders across Australia
- Potentially secure refinance interest rates that suit your budget
- Change your loan term to align with your financial goals
- Adjust your payment frequency to accelerate your mortgage payoff
Consolidate Debts While Optimising Payment Frequency
Refinancing provides an opportunity to consolidate debts while establishing a payment schedule that works for your budget. If you're releasing equity in your property to pay off credit cards or personal loans, consider how your new payment frequency will affect your overall financial management.
Weekly or fortnightly payments can help you budget more effectively, especially if your income is paid on the same frequency. This alignment between your income and loan repayments can improve your cash flow management.
Accessing Better Loan Options Through Professional Guidance
As a Finance & Mortgage Broker, Personalised Finance can help you access loan options from banks and lenders across Australia that offer flexible payment frequencies. We'll review your banks statements, assess your current financial situation, and guide you through the application process to find options that suit your circumstances.
Our streamlined application process includes:
• Conducting a comprehensive home loan health check
• Evaluating your eligibility for special lender policies
• Comparing refinance interest rates across multiple lenders
• Assessing how different payment frequencies impact your loan amount and interest costs
Release Equity to Buy Your Next Property
If you're planning to release equity to buy the next property, your payment frequency strategy becomes even more important. The faster you build equity in your current property through accelerated payments, the sooner you can access funds for your next investment or upgrade.
Consider how fortnightly or weekly payments on your refinanced loan could help you reach your equity goals more quickly, giving you more flexibility for future property purchases.
Making the Right Choice for Your Situation
The optimal payment frequency depends on your individual circumstances:
• Choose weekly payments if you're paid weekly and want maximum interest savings
• Opt for fortnightly payments if you're paid fortnightly or want a balance between savings and manageable payment amounts
• Stick with monthly payments if you prefer larger, less frequent payments and have strong budgeting discipline
Remember, you can often change your payment frequency after refinancing, but it's worth setting it up correctly from the start to maximise your savings.
Refinancing your home loan presents an excellent opportunity to optimise both your interest rate and payment structure. By working with experienced Mortgage Brokers who understand the nuances of different lenders' policies, you can ensure your refinancing strategy aligns with your long-term financial goals.
Call one of our team or book an appointment at a time that works for you to discuss how refinancing with the right payment frequency can improve your financial position.
