How do mortgage repayments work?

How do mortgage repayments work?
Did you know that when you take out a mortgage, you can choose how often you wish to make repayments on your loan?
Calculate your repayments

Mortgage payment frequency

You will typically have the option to repay your loan on a monthly, fortnightly, or weekly basis.

Your chosen payment frequency will determine the size of your repayments and the time it takes to repay your loan. This can be used as a strategy so you can save thousands of dollars on your home loan. Essentially, the more frequently you make mortgage repayments, the faster you reduce the principal, saving you interest.

To understand how mortgage payment frequency works, let’s take a look at the various options in more detail:

Let’s assume you have a loan amount of $350,000. A variable interest rate of 3.64%, and a loan term of 30 years.

Monthly payments

Paying monthly is the most common way to pay off your loan. With the given example, your monthly repayments will be $1,599 with 12 payments each year totaling $19,188. The total interest paid will be $225,689. This is based on our mortgage calculator.

Fortnightly payments

Paying fortnightly means you’re paying twenty-six times in a year, rather than the twenty-four payments you would expect from halving the monthly payment. So effectively, you’re making thirteen months worth of repayments a year. This means you will pay off your loan earlier than you would with monthly repayments. Your fortnightly repayments will be $783. The total interest payable is $199,945. Over the course of the loan, you would save $25,744 in total interest.

Weekly payments

With weekly payments, you would need to pay $392 every week, with 52 payments each year. Your total interest payable will be $199,832, allowing you to save $25,857 in interest compared to monthly repayments. Similar with fortnightly repayments you can save 3 years off your 30-year loan term.

The table below shows a clearer mortgage payment comparison:

$350,000 Mortgage








Total Interest Payable




Total Interest Saved




Time Saved


3 years

3 years

The bottom line is, the higher the frequency of your repayments, the faster you can own your property, and the more you save on interest. You can easily calculate your own mortgage payments by using our online mortgage calculator.

Making extra repayments

Did you know that you can make extra repayments above the minimum? Paying extra, even if the sums are small, can make a huge difference over the life of your loan.

Let’s use our example above again, you have a 30-year loan for $350,000 at an interest rate of 3.64%. You opted for a monthly repayments and you start paying an extra $100 every month for 5 years. You could save $16,880 in interest and shave 2 years and 4 months off your loan term.

Paying an additional $100 dollars for five years straight will accumulate to $6,000. This amount can be used to repay your loan during a rainy day or to get you through expenses like Christmas season. To know how much you can save when making extra repayments, you can use our additional repayments calculator.

The accrued amount will be put into your offset sub-account. This is a loan feature with an sub-account linked to your home loan. You can access or redraw your money when you need it by using your Visa Debit card connected to the account.

This facility also lets you offset its balance against your loan balance. So if you have $10,000 in your offset sub-account, and a loan balance of $100,000, instead of calculating your home loan interest on $100,000, it’ll only be calculated on $90,000. This helps you save on interest.

It’s highly recommended that you use a mortgage calculator to see what kind of repayment frequency you can afford. 

Tags: home loan calculator | home loan repayments

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