Looking for a way to cut down on your mortgage costs? A simple switch could help—changing your repayment frequency from monthly to bi-weekly.
Why does this work?
Paying fortnightly instead of monthly can reduce your mortgage payments and help you pay off your loan faster. This trick works because many lenders calculate mortgage interest on a daily basis. The more often you make payments, the quicker your balance decreases, and the less interest you’ll pay in the long run.
Can you switch to bi-weekly payments?
Most lenders default to monthly payments, but many will let you set up a manual payment system on a bi-weekly schedule. You’ll need to speak with your lender to check if this is possible. Some lenders allow it as long as the total monthly amount is still paid by the agreed-upon date.
What about paying off your mortgage faster?
Fortnightly payments can help you pay off your mortgage faster. Why? Because you’re making 26 half-payments a year, which equals 13 full payments—an extra payment that goes directly toward reducing your mortgage balance. If your lender allows this, it can speed up your mortgage payoff.
Are interest-only mortgages less common now?
Interest-only mortgages have become rarer due to new regulations introduced after the Mortgage Market Review in 2014. Lenders now require more checks to ensure you can repay your full balance, making these types of mortgages riskier for borrowers.
Other ways to reduce your mortgage?
In addition to switching your repayment schedule, you can also make overpayments.
By paying extra toward your mortgage, you reduce the total interest paid and potentially lower your monthly repayments in the future.
Mike Plaster, Mortgage and Protection Advisor at Millennium Mortgages, advised: “Each lender has its own rules, so always confirm any changes with your lender before making adjustments.”
Oren Kander, Senior Valuer at Gaffsy, said: “For those looking to cut down on interest payments, switching to bi-weekly repayments is definitely worth considering.”
If you’re facing financial challenges and need to sell quickly, Gaffsy is here to help guide you through every step of the process.
