Fortnightly Payments: An Alternative to Monthly Mortgages

Are you looking to reduce the amount of time it takes to pay off your mortgage? Have you considered making fortnightly payments instead of monthly ones? In this blog post, we'll explore the benefits of making fortnightly payments, as well as the potential drawbacks you need to be aware of. We'll also outline the steps you need to take to switch to fortnightly payments on your current mortgage. So, if you're interested in making the switch to fortnightly payments, read on to find out more!

Why Make Fortnightly Payments?

Fortnightly payments are a form of mortgage repayment where you make a payment twice a month instead of once a month. It is similar to making two monthly payments in a month, but instead of making one payment at the end of each month, you make two payments every fortnight.

Fortnightly payments are becoming increasingly popular in Australia, as they can help homeowners to pay off their mortgage faster. This is because when you make a payment every fortnight, you are effectively making thirteen payments a year instead of twelve. This means that you are able to pay off the loan slightly faster, as more of your payments are going towards the principal amount of your loan.

When considering whether to make fortnightly payments, it is important to consider your budget and lifestyle. Making fortnightly payments can be a great way to reduce the interest you pay on your loan, as you are reducing the amount of time that the interest accumulates. However, if you have a tight budget then fortnightly payments may be too much of a strain on your finances. It is important to ensure that you are able to make the payments each fortnight and that you are comfortable with the amount that you are paying.

Another important factor to consider when making fortnightly payments is the impact that it will have on your family law settlement. If you are in the process of negotiating a family law settlement, then it is important to ensure that both parties are aware of the extra payments that you will be making. It is also important to ensure that you are comfortable with the agreement that you come to.

Overall, fortnightly payments can be a great way to pay off your loan faster and save money on interest. However, it is important to consider your budget and lifestyle when deciding if fortnightly payments are the right option for you. Additionally, if you are in the process of negotiating a family law settlement, it is important to ensure that both parties are aware of the extra payments that you will be making.

Benefits of Choosing Fortnightly Payments

Choosing to make fortnightly payments on your mortgage can be a great way to reduce your loan debt faster and free up your cash flow. There are a number of benefits associated with selecting a fortnightly payment plan, and it is important to consider these carefully when deciding which payment option is right for you.

One of the main benefits of making fortnightly payments is that you are able to make an extra payment per year without affecting your cash flow. This is because, when you divide your normal monthly payment in two and pay it every two weeks, you are effectively making one extra payment per year. This can help reduce the interest you pay and the amount of time you need to pay off your loan.

Another benefit of choosing fortnightly payments is that it can help you budget better. By making payments every two weeks, rather than once a month, you can better manage your finances and have more money available for other expenses. This is because you are better able to keep track of your payments and ensure that you are making them on time.

Finally, if you choose to make your payments fortnightly, you will also be able to take advantage of the way in which the Australian tax system works. By making your payments fortnightly, you can claim the equivalent of an extra month’s payment as a tax deduction. This can help reduce your tax bill and free up more of your income for other uses.

When considering whether to make your mortgage payments on a fortnightly basis, it is important to take into account the associated costs and benefits. While it can be an effective way to reduce your loan debt and manage your cash flow, there may be additional costs associated with making fortnightly payments, such as additional fees from your lender or account provider. Additionally, it is important to consider the impact of the extra payment on your family budget, and the potential tax implications of making the payments.

Overall, making fortnightly payments on your mortgage can be an effective way to reduce your loan debt faster and free up your cash flow. It is important to consider the associated costs and benefits carefully before making your decision.

Key Considerations When Selecting Fortnightly Payments

When deciding on whether a fortnightly mortgage payment plan is right for you, there are a few key things to consider.

First, it’s important to understand the difference between a fortnightly versus a monthly payment plan. A fortnightly payment plan will have you making a payment every two weeks, while a monthly payment plan will have you making a single payment each month. With a fortnightly plan, you’ll end up making the equivalent of 13 payments a year, while with a monthly plan, you’ll make 12 payments. This can be a great way to pay off your mortgage more quickly, as you’ll essentially be making an extra payment each year.

Second, it’s important to understand the implications of making fortnightly payments. While you’ll be paying off the loan quicker with this option, you’ll also be paying more in interest over the life of the loan. This is because the interest rate is calculated on the outstanding balance, and with a fortnightly payment plan, the outstanding balance will be lower for a longer period of time.

Third, it’s important to understand the implications of making payments directly from your salary. If your lender is willing to accept fortnightly payments directly from your salary, you should make sure you have a clear understanding of the fees associated with this option and any other implications.

Finally, it’s important to understand the implications of changing your payment plan. If you decide to switch from a monthly payment plan to a fortnightly payment plan, you should make sure you understand any potential fees or other implications associated with making this change.

When selecting a payment plan, it’s important to carefully consider all the pros and cons of each option. You should also make sure you understand any fees or other implications associated with making changes to your payment plan. By taking the time to consider all of the factors at play, you’ll be able to make the best decision for your situation.

How to Switch to Fortnightly Payments

Switching to fortnightly payments is a great way to save money on your mortgage. The good news is that it’s not hard to make the switch.

First, you should check with your lender to see if they offer the option of making fortnightly payments. Some lenders may not offer this option, but most major lenders do.

If your lender does offer fortnightly payments, the next step is to decide how much you’d like to pay. You can pay the same amount that you currently pay each month, or you can choose to pay more. Paying more will reduce the amount of time it takes to pay off your mortgage.

Once you decide on the amount you’d like to pay, you should work out a budget. It’s important to make sure that you can afford the payments and that you have enough money left over for other bills.

Once you’ve worked out a budget, you should contact your lender to make the switch. You may need to provide them with proof of income, so make sure you have that ready. It’s also important to make sure that your lender is aware of all the details of your mortgage, such as the interest rate, the terms and the payment schedule.

Finally, you should keep track of your payments to ensure that you’re making them on time and that you’re not missing any. Making your payments on time is essential in order to keep your credit rating in good standing.

Switching to fortnightly payments is an excellent way to save money on your mortgage and reduce the amount of time it takes to pay off your loan. The process is straightforward and doesn’t require any major changes to your lifestyle. However, it’s important to make sure that you’re able to afford the payments and that you keep track of your payments to ensure that they’re being made on time.

We understand you and we want to help

At Ello Lending, we're dedicated to helping our clients find the perfect mortgage solution that suits their lifestyle and budget. We understand that making regular payments can be difficult, which is why we're proud to offer our customers the option of fortnightly payments. We believe that by making fortnightly payments, you can save money in interest and pay off your mortgage faster. If you have any questions about how this alternative payment option can help you, please do not hesitate to contact us today. We would love to help you get the most out of your mortgage and make your life easier.