Repayment of the loan and interest are made every month. Usually, when a person takes a home loan in Sydney, they make repayments and interest every month (however, there can be some exceptions). According to some people, if you make the repayments every fortnight, you will have to pay a lower rate of interest. Is this true? Or to what extent it is true? Though some believe it is true, it is a little complicated. Read the blog to know more about it.
Multiple factors influence the loan, such as its terms, conditions, fluctuating interest rates, policies, etc. In order to properly know whether you can repay the loan faster than the set duration, you must consult with the lender and your finance broker. A broker can understand your requirements patiently and accordingly provide solutions. If you want changes in the terms and conditions of the loan and want flexibility, a broker can help you achieve that before finalising the conditions of the loan. They can also help you learn how to increase your borrowing capacity. Hence, it is better to consult a finance broker in Sydney to ensure you select the loan with the right terms and conditions.
Do I Pay Less Interest Rates If I Pay Every Fortnight?
Although it may not always be the case, it is possible. In short, yes, you can pay less interest rate. To calculate the interest rate, the lender uses the principal amount. The faster you make repayment, the more your principal amount reduces. As a result, the interest rate on the total amount will also decrease. Instead, if you pay monthly, the principal amount will be reduced on a monthly basis. However, when it is paid after every 14 days, the total amount decreases, resulting in a reduced interest rate. For proper guidance regarding loan repayment, consult a professional finance broker in Sydney.
Can I Make Extra Repayments In A Year By Paying Fortnightly?
Technically, yes. It is possible to make more repayments in a year if you pay within a period of 14 days. In general, the terms of repayment include making 12 repayments in a year. But if you pay fortnightly, your number of repayments doubles. However, in order to do this, you will have to check the terms and conditions of the loan. During the loan agreement, the lender decides the repayments to be made in a year; according to that, you are supposed to make repayments. If you want to change or negotiate the loan terms, consult your lender and talk to them about the home loan in Sydney terms and conditions. You can also hire a finance broker to help you negotiate the terms effectively and as per your requirements.
ConclusionSo, do you really pay a lower interest rate by making loan repayments every 14 days? It is not that easy. Although it is possible, other factors affect the repayment and interest rate, such as the banks’ annual charges, fluctuations in the rate of interest and whether you redraw the loan amount, etc. Due to all these factors, the repayment and interest rate fluctuates. Hence, you must consult a professional finance broker in Sydney as they can help you as per your requirements.
