Fortnightly vs monthly mortgage repayments: which saves more?

Switching to fortnightly repayments only saves real money if you pay half your monthly repayment every fortnight. A "true" fortnightly repayment, which is what a bank sets when you simply choose fortnightly, is worked out over 26 periods a year and costs almost exactly the same as paying monthly. On a $600,000 loan over 30 years at 5.06% (the average one-year fixed rate, rates as at 10 November 2026), monthly is $3,242.97 and true fortnightly is $1,496.04. Half the monthly amount is $1,621.49 a fortnight. Because 26 fortnights make 13 half-months, that pays one extra monthly repayment a year, clears the loan in about 25 years and 2 months instead of 30, and saves about $104,855 in interest.

Two very different kinds of fortnightly

"Fortnightly repayments" can mean two different things, and they give very different results.

1. True fortnightly. The bank works out a fresh repayment using 26 repayments a year over the same term. This is what you get when you ask your bank to change the frequency. BNZ, for example, says that for weekly and fortnightly loans "we calculate interest based on the number of days in those repayment periods (7 or 14 days respectively)". The repayment is set so the loan finishes on the same date it would have on monthly repayments.
2. Half the monthly, every fortnight (sometimes called accelerated fortnightly). You take your monthly repayment, halve it, and pay that every fortnight. There are 26 fortnights in a year but only 12 months, so 26 halves are 13 monthly repayments. You pay one extra month's worth every year without really noticing.

ANZ's home loan handbook puts it plainly: "Paying fortnightly instead of monthly means you'll repay slightly more over the year as you will be paying the equivalent of one extra monthly repayment a year." That extra money goes straight off the principal, and that is where the saving comes from.

Worked example: $600,000 over 30 years at 5.06%

Here are the three options side by side, all at 5.06% for the whole term and all run repayment by repayment through our engine.

What the table shows:

• True fortnightly barely moves the needle. It pays $18.60 less a year than monthly and saves about $572 of interest over 30 years. The small saving comes from paying a little sooner on average, not from paying more.
• Half the monthly pays $3,243.10 more a year than 12 monthly repayments. That is one monthly repayment, give or take a few cents of rounding.
• That extra month a year saves about $104,855 compared with true fortnightly (about $105,427 compared with monthly), and the loan finishes after 655 fortnights instead of 780.

ANZ's handbook gives an older example of the same effect: "paying $1,200 a fortnight rather than $2,400 a month on a $400,000 loan at an interest rate of 4.00% p.a would reduce the total interest charged by around $23,000 and instead of 20 years, the loan would be paid off two years earlier." Our engine reproduces that: $2,400 a month clears in 244 months, $1,200 a fortnight in 468 fortnights (18 years), saving $23,496.

Why one extra repayment a year saves so much

It seems odd that 8% more a year (13 months' worth instead of 12) knocks nearly 5 years off a 30-year loan. Three things combine:

• All of the extra goes to principal. The regular repayment already covers the interest, so every extra dollar reduces the balance directly.
• Less principal means less interest next time. A smaller balance attracts less interest, so a bigger share of every later repayment also goes off the loan. The effect snowballs.
• It starts early. In the first year of a table loan, most of each repayment is interest (see how mortgage repayments work). An extra repayment then skips decades of interest.

In other words, "half the monthly fortnightly" is really a disciplined form of extra repayments: an extra $3,243 or so a year, paid in small pieces. You could get much the same result by keeping monthly repayments and adding $270 a month: on our example that saves about $104,142 and finishes in 25 years and 3 months. You can test either approach on our extra repayments calculator. The fortnightly version just tends to be easier to live with if you are paid fortnightly.

The saving is not a trick of the frequency, and it is not free money: you really are paying more each year. If your budget is tight, true fortnightly gives you a repayment that lines up with your pay without lifting your yearly cost.

The same effect on other loan sizes

Because the extra is always one monthly repayment a year, the time saved is the same at any loan size for a given rate and term: about 25 years and 2 months instead of 30 at 5.06%. The dollar saving grows with the loan.

All at 5.06% over 30 years, the rate held for the whole term. For more amounts, see repayments by loan size.

When a true fortnightly repayment makes sense

A true fortnightly repayment is not a bad choice; it just is not a saving. It suits people who are paid fortnightly and want the mortgage to leave their account on payday, without lifting what they pay over a year.

It also avoids a common budgeting trap. There are 26 fortnightly paydays in most years, which is 24 spread two to a month and two left over, so two months each year have three paydays. If you are paid fortnightly but repay monthly, you have to hold back part of each pay to meet the monthly repayment, and the three-payday months can make the budget feel uneven. A fortnightly repayment lines up with every pay.

If you then find you have room to spare, you can lift the fortnightly repayment towards half the monthly figure, in steps, as your budget allows. Every extra dollar a fortnight goes straight off the principal.

How to set it up with your bank

When you change to fortnightly, the bank will normally recalculate a true fortnightly repayment. If you want the faster payoff, you need to ask for a higher amount. Some practical points:

• Ask which figure you are getting. If the fortnightly figure is close to your yearly total divided by 26 (here $3,242.97 x 12 / 26 = $1,496.76), it is effectively a true fortnightly repayment and will not shorten the loan much.
• Check the fixed-term limits. Paying more than the minimum counts as an extra repayment. On a fixed rate, banks cap how much extra you can pay without a break fee. ANZ allows an increase of up to $250 a week (the first increase each year), and BNZ and Kiwibank allow up to 5% of the loan a year. We have not confirmed ASB's or Westpac's allowances. An extra $125 or so a fortnight is well inside those limits, but check your own loan terms. Our extra repayments guide has the details, and break fees explains what happens if you go over.
• Daily interest makes little difference. Banks that charge interest over the actual 14 days come out a few dollars different: on our example, 14/365 days gives about $1,493.68 rather than $1,496.04. The extra-repayment effect is the same either way.
• Floating loans are the most flexible. ANZ says "On a floating ANZ Home Loan you can make extra repayments whenever you like."

This guide is general information, not financial advice. Rates as at 10 November 2026; the example assumes the rate never changes, which on a real loan it will at each refix. Our repayment calculator shows true weekly, fortnightly and monthly figures side by side, and the half-monthly option with the time and interest saved.

Questions people ask

Do fortnightly repayments really save money?

Only if you pay half your monthly repayment each fortnight. That adds one monthly repayment a year and, on $600,000 at 5.06% over 30 years, saves about $104,855. A true fortnightly repayment set by the bank saves only about $572 over 30 years.

Why is half my monthly repayment more than the bank's fortnightly figure?

Because there are 26 fortnights a year, not 24. The bank's true fortnightly figure is spread over 26 periods, so it is a little less than half the monthly. On our example it is $1,496.04 against $1,621.49.

Can I pay half the monthly amount on a fixed rate?

Usually, as long as the extra stays within your bank's allowance. ANZ allows an increase of up to $250 a week, and BNZ and Kiwibank allow up to 5% of the loan a year. Check your own loan terms, especially at ASB and Westpac, which we have not confirmed.

Is weekly even better?

A quarter of the monthly repayment each week has almost exactly the same effect as half the monthly each fortnight: one extra monthly repayment a year. Our weekly repayments guide has the figures.