Switching to fortnightly repayments is common advice, and the reason it works is usually explained wrongly.
There are two different things it can mean, and they produce different results. This calculator shows both so the difference is visible rather than asserted.
Separates the two things people mean by "paying fortnightly": genuinely repaying every fortnight, and paying half a monthly repayment every fortnight — which is thirteen monthly repayments a year.
Loan amount, rate and term
The same loan under both arrangements. Nothing about the loan changes; only the repayment pattern does.
A true fortnightly repayment is the amount that clears the loan over the term when paid every fortnight. Because interest is calculated on a smaller average balance, it saves a little — but the annual amount paid is essentially the same as monthly, so the saving is modest.
Half the monthly repayment paid every fortnight is a different thing entirely. There are twenty-six fortnights in a year but only twelve months, so this pays thirteen monthly repayments a year rather than twelve. That extra month is where nearly all the widely-quoted saving comes from.
This matters because the common framing — "pay fortnightly and save years" — credits the frequency for a benefit that actually comes from paying about 8% more each year. The frequency is not doing the work. Knowing which is which lets you decide whether you want to pay more, rather than being told you are getting something for nothing.
Every figure below is computed by the same calculator on this page, from the inputs described. Nothing here is typed in by hand, so an example cannot disagree with the tool.
Compare the two fortnightly figures against each other, not just against the monthly one. The gap between them is the extra you would be contributing under the half-monthly arrangement.
The monthly repayment is computed from the loan in the usual way. The true fortnightly repayment is computed independently over twenty-six periods a year.
The half-monthly figure is simply the monthly repayment divided by two, and the loan is then run forward at that amount every fortnight until the balance clears.
Both are compared against the same loan paid monthly, so the difference between them isolates the effect of the extra annual contribution.
The lender accepts the arrangement
Most Australian lenders offer fortnightly repayments. Fewer will take exactly half the monthly amount and treat the surplus as an extra repayment automatically; some require you to set it up as a higher fortnightly payment.
Twenty-six fortnights a year
A year is 52 weeks and a day, so occasionally a twenty-seventh fortnightly payment falls in a calendar year. The model uses 26, which is the convention lenders schedule to.
It does not tell you which to choose
Paying about 8% more a year is a good idea if you can afford it and a strain if you cannot. The calculator makes the trade-off visible; the decision is about your cash flow.
Works out the regular repayment on a home loan, and what it adds up to in interest over the full term.
Shows how paying more than the minimum each period shortens a home loan and cuts the interest paid.
Works out how long a loan takes to clear at a chosen repayment, and what it costs in interest along the way.
This calculator can be embedded on a business website, branded to match it, with a call to action that sends the enquiry to that business rather than collecting anything here.