How much does paying fortnightly instead of monthly save on a home loan? Switching from monthly to fortnightly repayments effectively adds one extra month’s worth of repayments per year, because there are 26 fortnights in a year rather than 24 half-monthly periods. On a $500,000 loan at 6.5% over 30 years, that alone can cut around three to four years off the loan term and save a significant amount in interest. The calculator shows your specific numbers based on what you enter.

Can I make extra repayments on a fixed rate home loan? Most fixed rate loans allow extra repayments up to a cap – commonly $10,000 or $20,000 per year – without penalty. Anything above that threshold may attract a break cost, which can be substantial depending on how far rates have moved since you fixed. Check your loan contract or call your lender before making a large lump sum payment on a fixed rate loan.

Is extra repayment better than an offset account? They produce the same interest saving in most cases, but they work differently. Extra repayments permanently reduce your loan balance – that money is gone unless you have a redraw facility. An offset account keeps the funds accessible while still reducing the interest you pay. If you might need access to the money, an offset is more flexible. If you want to lock the discipline in and not touch it, extra repayments work just as well.

When does refinancing make more sense than extra repayments? If your current rate is materially higher than what’s available elsewhere, refinancing first and then making extra repayments on the lower rate loan produces a better outcome than extra repayments at the higher rate. The break-even point depends on any exit fees on your current loan and establishment fees on the new one. If you’re more than two years into a variable rate loan with no exit fees, it’s usually worth checking what else is available before committing to an accelerated payoff strategy on the existing rate.