Fortnightly vs Monthly: The NZ Perspective
In New Zealand, most lenders allow you to choose between weekly, fortnightly, or monthly payment frequencies. While it might seem like a small decision, this choice can have a significant impact on your mortgage.
How Fortnightly Payments Save You Money
When you switch from monthly to fortnightly payments, you make 26 half-month payments per year instead of 12 full payments. This equals 13 full months worth of payments annually.
Example:
- Monthly payment: $2,000 × 12 = $24,000/year
- Fortnightly payment: $1,000 × 26 = $26,000/year
That extra month's payment goes directly to reducing your principal, meaning less interest charged over the life of your loan.
The Numbers Don't Lie
On a $500,000 mortgage at 6.5% interest over 30 years:
- Monthly payments: Total interest = $658,475
- Fortnightly payments: Total interest = $592,327
That's $66,148 in savings and 4.5 years shaved off your loan!
When Fortnightly Makes Sense
- You get paid fortnightly (most NZ employees do)
- You want to pay off faster without increasing monthly cash flow
- You're disciplined enough to not touch the "extra" money
When to Stick with Monthly
- Monthly fits your cash flow better
- You have other financial priorities
- Your lender charges fees for frequency changes
Bottom Line
For most New Zealanders, fortnightly payments are a no-brainer. It's free money to your mortgage without sacrificing lifestyle. Use our calculator to see exactly how much you could save.