Home Loan: When To Repay Fortnightly Or Monthly
Home Loan: When to Repay Fortnightly or Monthly
What is Home Loan?
A home loan is a loan taken out to purchase a property, usually a house. It is secured against the value of the property and is typically the largest loan most people will ever take out in their lifetimes. Home loans are typically taken out over a long period of time, typically between 5 to 30 years.
What are the Repayment Options?
When it comes to repaying a home loan, most lenders offer two repayment options: fortnightly and monthly. As the name suggests, fortnightly payments are made every two weeks and monthly payments are made every month.
Advantages of Fortnightly Repayment
Fortnightly repayments offer a number of advantages. Firstly, they help you pay off your loan sooner as you make more payments each year. This is due to the fact that there are 26 fortnights in a year, compared to 12 months. This means that you make an extra two payments each year, which can reduce the total amount of interest you pay over the life of the loan.
Advantages of Monthly Repayment
Monthly repayments offer some advantages of their own. Firstly, it is easier to budget for your monthly payments as you make the same payment each month. This makes it easier to plan your finances and budget for other expenses. Secondly, you don’t have to worry about missing a payment as you only have to pay once a month.
What Are the Best Repayment Options?
The best repayment option for you will depend on your financial situation. If you can afford to make more frequent payments, then fortnightly repayments may be the better option as it can help you pay off your loan sooner. However, if you're on a tight budget, then monthly repayments may be the better option as it may be easier to manage your finances.
Conclusion
When it comes to repaying a home loan, it is important to consider both fortnightly and monthly repayments. Both have their advantages and disadvantages, and the best option for you will depend on your financial situation. It is also important to speak to a financial advisor to ensure that you are making the right decision for your finances.
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