Refinancing Hacks to Change Your Payment Frequency

Understanding Payment Frequency Options When You Refinance

When you're thinking about refinancing your home loan, most people focus on getting a lower interest rate or accessing equity. But here's something that often gets overlooked: changing your payment frequency could be one of the smartest moves you make during the refinance process.

Payment frequency refers to how often you make your mortgage repayments. While monthly payments are common, you have other options that could potentially save you thousands of dollars over the life of your loan. Let's break down how this works and why it matters when you refinance your mortgage.

The Different Payment Frequency Options Available

When you refinance to a new lender or restructure your existing loan, you'll typically have these payment frequency choices:

• Monthly payments: One payment per month, 12 payments per year
• Fortnightly payments: One payment every two weeks, 26 payments per year
• Weekly payments: One payment per week, 52 payments per year

Here's where it gets interesting. If you're currently paying $2,000 per month and you switch to fortnightly payments, you wouldn't just pay $1,000 every fortnight. Instead, you'd pay around $923 ($2,000 x 12 months ÷ 26 fortnights). This means you'll actually end up making an extra month's worth of payments each year without really noticing the difference in your cashflow.

How Changing Payment Frequency Saves You Money

The mathematics behind payment frequency is compelling. When you increase your payment frequency, you're reducing your loan amount more quickly, which means you're paying less interest over time.

Let's say you have a $500,000 loan amount on a variable interest rate of 6.5% over 30 years:

• Monthly payments: You'd pay approximately $816,000 in total interest
• Fortnightly payments: You'd pay approximately $746,000 in total interest
• Weekly payments: You'd pay approximately $743,000 in total interest

That's a potential saving of around $70,000 just by switching from monthly to fortnightly payments. You'd also shave roughly three years off your loan term.

Why Refinancing Is the Perfect Time to Make This Change

When you refinance your home loan, you're essentially starting fresh with a new loan structure. This makes it the ideal opportunity to review and adjust your payment frequency. Here are some reasons why now is the time:

1. You're already going through the refinance application process: Adding a payment frequency change doesn't complicate things
2. Your cashflow might have improved: If you're earning more than when you first took out your mortgage, you can handle more frequent payments
3. You can combine it with other improvements: Switch to a lower rate, add an offset account or redraw facility, and change your payment frequency all at once
4. Coming off a fixed rate period: If your fixed rate period is ending, you have the perfect opportunity to restructure everything

Matching Payment Frequency to Your Income Schedule

One of the practical benefits of adjusting your payment frequency during a home loan refinance is aligning your mortgage payments with how you get paid. If you receive your salary weekly or fortnightly, matching your mortgage payments to this schedule can help improve your cashflow management.

This alignment means you're paying your mortgage shortly after you receive income, reducing the temptation to spend that money elsewhere. It's a psychological advantage that helps you stay on top of your loan repayments without feeling financially stretched.

What to Consider Before Changing Your Payment Frequency

While more frequent payments can save on interest, you'll want to consider a few things:

• Your budget: Can you comfortably afford slightly higher total annual payments?
• Income stability: Do you have consistent income to support weekly or fortnightly payments?
• Other debts: If you're planning to consolidate into your mortgage, factor this into your calculations
• Access to funds: If you might need to access funds quickly, ensure your new loan has a refinance offset account or refinance redraw facility

A home loan health check can help you determine whether changing your payment frequency makes sense for your situation.

Combining Payment Frequency Changes with Other Refinancing Benefits

When you're looking at why refinance, payment frequency is just one piece of the puzzle. You might also be:

• Accessing a lower interest rate to reduce your overall repayments
• Releasing equity in your property for renovations or investment
• Switching from a fixed interest rate to a variable interest rate (or vice versa)
• Moving your mortgage to a lender with improved features
• Accessing equity for investment purposes

The refinance process lets you address multiple financial goals simultaneously. Perhaps you're stuck on a high rate after your fixed rate expiry, and you want to access equity while also optimising your payment schedule.

When to Refinance and Review Your Payment Options

Timing matters when you refinance. Here are situations where reviewing your payment frequency makes particular sense:

• Your fixed rate period is ending and you're reviewing all your options
• You've received a pay rise or your household income has increased
• You're conducting a loan review and realise you're paying too much interest
• You want to unlock equity to buy your next property
• Interest rates have changed and there are current refinance rates worth exploring
• You're looking to reduce loan costs across the board

Whether you're based in Sydney or anywhere across Australia, the principles remain the same. A loan health check every couple of years ensures you're not missing opportunities to save money refinancing.

The Application Process for Changing Payment Frequency

The good news is that specifying your preferred payment frequency is usually a straightforward part of your refinance application. Your mortgage broker will include this preference when submitting your application to lenders.

Most lenders don't charge extra for weekly or fortnightly payments, though it's worth confirming this during the application process. The property valuation, income verification, and other standard refinancing steps remain the same regardless of your chosen payment frequency.

If you're looking at refinancing options, discussing payment frequency with your broker should be part of your initial conversation. They can run the numbers to show you exactly how much you could save over different timeframes.

Making Your Decision

Changing your payment frequency when you refinance your mortgage isn't right for everyone, but for many Australian homeowners, it's a powerful tool to save thousands without dramatically changing your lifestyle. The key is understanding your own financial situation, income patterns, and long-term goals.

Refinancing gives you a chance to reset your home loan on your terms. Whether you're coming off a fixed rate, want to compare refinance rates, or simply want to reduce how much interest you're paying, looking at payment frequency alongside interest rates and loan features gives you the complete picture.

If you're considering a home loan refinance and want to explore how payment frequency changes could work for you, the team at Little Bull Finance can walk you through your options. We'll help you understand the potential savings, assess whether it suits your cashflow, and structure your loan properly - not just get it approved.

Call one of our team or book an appointment at a time that works for you. Let's review your current situation and see how much you could save by making a few strategic changes to your home loan structure.