Do you pay less interest if you pay your home loan weekly?

February 7, 2023

When it comes to home loan repayments, many people are unaware of the potential savings they can make by paying their loan off weekly. While it may seem like a small change, paying your home loan off weekly can have a significant impact on the amount of interest you pay over the life of the loan.

The most obvious benefit of paying your home loan off weekly is that you will pay less interest over the life of the loan. This is because when you make weekly payments, you are paying off the principal of the loan more quickly. This means that you will be paying less interest over the life of the loan, as the interest is calculated on the remaining balance of the loan.

Another benefit of paying your home loan off weekly is that you can reduce the amount of time it takes to pay off the loan. By making weekly payments, you are paying off the principal of the loan more quickly, which means that you will be able to pay off the loan in a shorter period of time. This can be especially beneficial if you are looking to pay off the loan sooner rather than later.

Finally, paying your home loan off weekly can also help you to stay on top of your finances. By making regular payments, you will be able to keep track of your loan balance and ensure that you are making the necessary payments on time. This can help to ensure that you are not missing payments, which can lead to additional fees and charges.

When it comes to home loan repayments, it is important to remember that the amount of interest you pay will depend on the type of loan you have and the terms of the loan. However, by making weekly payments, you can reduce the amount of interest you pay over the life of the loan and reduce the amount of time it takes to pay off the loan.

If you are looking to save money on your home loan repayments, then paying your loan off weekly is definitely worth considering. By making regular payments, you can reduce the amount of interest you pay over the life of the loan and reduce the amount of time it takes to pay off the loan. This can help to ensure that you are able to pay off the loan sooner rather than later and stay on top of your finances.

Pros of making weekly repayments on your home loan:

Interest savings: By making weekly repayments, you can save on interest over the life of your loan, as you are effectively reducing the principal balance more frequently.
Faster repayment: Weekly repayments help you pay off your mortgage faster, as you are making more payments in a year.
Better budgeting: Weekly repayments can help you better manage your budget, as you can spread your mortgage payments over more frequent intervals, making it easier to plan ahead and avoid financial surprises.
Reduce risk: If you are worried about losing your job or facing unexpected expenses, making weekly repayments can help you build up a buffer that can provide some protection against financial setbacks.

Cons of making weekly repayments on your home loan:

Inconvenience: Weekly repayments may be inconvenient, as they require you to make more frequent payments and keep track of your payment schedule more closely.
Potential fees: Some lenders may charge a fee for making more frequent payments, which can add to the cost of your mortgage.

Pros of making monthly repayments on your home loan:

Simplicity: Monthly repayments are simple and easy to manage, as they only require you to make one payment per month.
Flexibility: Monthly repayments can be more flexible than weekly repayments, as you can choose to make extra payments at any time, without having to commit to a specific payment schedule.

Cons of making monthly repayments on your home loan:

Interest costs: By making monthly repayments, you may end up paying more interest over the life of your loan, as you are reducing the principal balance less frequently.
Longer repayment time: Monthly repayments can extend the life of your loan, as you are making fewer payments in a year, which can increase the amount of time it takes to pay off your mortgage.
Less budget control: Monthly repayments can make it harder to manage your budget, as you have to allocate a larger amount of money each month, which can be difficult if you have other expenses to pay.

Overall, the decision to make weekly or monthly repayments on your home loan depends on your personal preferences and financial situation. While weekly repayments can help you save on interest and pay off your mortgage faster, they may also be more inconvenient and come with potential fees. On the other hand, monthly repayments can be simpler and more flexible, but they may also lead to higher interest costs and longer repayment times.

At Logan Home Loans, we understand that making decisions about your home loan can be overwhelming. That's why we're here to help you navigate the process and find the right loan for your needs. Our team of experienced mortgage brokers will take the time to understand your unique circumstances and guide you through the options available to you. Whether you're looking to make weekly or monthly repayments, or need help with any other aspect of your home loan, we're here to support you every step of the way. Contact us today to learn more about how we can help you achieve your dream of owning a home.

< Older Post Newer Post >

February 2024 Cash Rate

February 6, 2024

Property and cash rate predictions for 2024

Banks “stand ready to help” people with home loan problems

January 3, 2024

The Australian Banking Association (ABA) has launched a campaign encouraging borrowers struggling with loan repayments to seek help, in a valuable reminder there are options available if you're finding it hard to keep up with your mortgage. Your bank may be able to: Reduce your home loan repayments. Pause your repayments temporarily. Switch your repayments from principal and interest to interest-only temporarily. Increase the length of your loan (thereby reducing the repayments). ABA CEO Anna Bligh said banks understood many borrowers were facing challenging circumstances. “Banks stood by their customers during the COVID-19 pandemic, deferring payments for people who for the first time in their lives found themselves unable to pay. Banks stand ready to help people again now,” she said. “People who are finding their finances are stretched should not feel they have no options and they have to do it on their own. Banks have dedicated, highly experienced teams ready to help.” As your broker, I'm also here to help. You're welcome to contact me for advice; I can then speak to and negotiate with your lender on your behalf. The key thing is to move fast, because the further you get ahead of the problem, the more flexible and helpful banks tend to be.

Is 2024 the year to buy property?

January 2, 2024

The Reserve Bank of Australia has rounded out 2023 with the decision to hold the nation’s cash rate at 4.35%. 2023 hasn’t been an easy year for homeowners or ambitious first-home buyers. The cash rate increased from 3.10% to 4.35% over the course of eleven months in the RBA’s bid to bring inflation back within its target range. According to data from the RBA, the average home loan rate at the start of the year (for existing home loans) was 5.46% p.a.. If the lender passed on interest rates in line with the increased cash rate, that would make the interest rate 6.71% p.a.. Based on the average Australian mortgage of $599,000 on a 25-year term paying principal and interest, that equals an additional $459 per month simply to service the mortgage (from $3,661 to $4,123 per month). For first-home buyers, the average time to save for a deposit has increased to 14 years, according to a recent paper by the Australian Housing and Urban Research Institute Limited, with the national ratio of median house price to median income now sitting at 8.5. That is the hard reality many Australians are currently facing. So the question is, what will 2024 bring? Short of looking into an Australian-economy crystal ball, we can’t predict exactly what will happen with inflation, the cash rate and therefore interest rates. However, there are a couple of factors to consider. The RBA will meet only eight times in 2024 to determine whether to move the cash rate, down from the eleven in 2023. This means potentially less movements through the year. The next cash rate announcement will be 6 February. Economists from the Big Four predict the cash rate is at, or near, its peak. Some predict at least one more rate hike in 2024 and rate cuts likely not happening until at least December. Despite predictions of a decline in house prices in 2023, they have actually continued to increase in most areas around the country. This could be good news for refinancers as we enter 2024, as they could find their equity has grown. Why 2024 could be a good time for first-home buyers Despite some potential challenges, 2024 could actually be a good time to get into the housing market. Here’s why. Savings interest rates are up - the pro of the cash rate going up is that savings interest rates also tend to go up. This can help expedite saving for a deposit. It could be cheaper to be a homeowner - according to PropTrack data, it is now cheaper to buy an apartment rather than renting one in most capital cities (based over a ten-year period with a 20% deposit). In fact, a third of properties nationally are cheaper to buy than rent. The First Home Guarantee has expanded - in 2023 the eligibility criteria for the First Home Guarantee, Family Home Guarantee and Regional First Home Buyer Guarantee was expanded, enabling eligible buyers to get into the market sooner. This means if you have a 5% deposit (or 2% if you are a single parent or guardian), you may be able to use one of the schemes to purchase property without paying lenders mortgage insurance. ‘Help to buy’ scheme to be introduced - the federal government has announced plans to rollout a new scheme that will help up to 40,000 eligible buyers with as little as a 2% deposit get into the housing market with lower repayments. If 2024 is the year you want to purchase your first home, it is a good idea to speak with your broker to find out how much you may be able to borrow and set a plan in place to achieve your goal.