Difference between Fortnightly and Monthly Loan Repayments
As urbanization reigns supreme among all human priorities, the need to establish a well coordinated lifestyle dominates each individual’s outlooks and perspectives. Technology being the dominion of our every action requires a more sophisticated and costly way of living.
As we compensate to money’s increasing demand new innovations, such as banks and lending companies have been invented to be a vessel for each human necessities hence, ways to recompense the services offered by these innovations has constantly been practiced. Which among fortnightly payments and monthly loan repayments stands to be of dominance when it comes to reduction of loan terms and mortgage cost?
Both are actually the same by all means, they only differ in frequency payment schedules. When we borrow money from banks or lending companies, we are entitled to pay our debts through monthly installments depending upon the purpose and amount of money we borrowed. This, however does not mean that we are subjected to pay for it every month, we do have the option to pay for it every after two weeks or fortnights. Through this, the amount due every month is reduced to half of its price however in doing so; we are tended to pay our debts in a more frequent time scheme.
The more frequent we make or payments, the shorter our loan terms become thus reduce our mortgage cost. How could this be possible? We all know that a year is comprised of 12 months. If we choose to pay our loans through monthly basis, we are doing 12 payments in an annum. If we prefer to do our payments through a fortnightly payment scale, we are actually making 13 payments in a year.
This is because in every annum, there are 26 fortnights which is equivalent to 13 months, furthermore an extra month every year is deducted from or loan term therefore our loan interests also are reduced. This is how fortnightly payments work. Through this method there is a possibility that or debts having a 30-year due could be lessen to 25 years. Imagine how much savings it will give you.
In general, both methods are helpful though in some instances their differences may affect our personal preferences. Still it is up to us what method would be more convenient and effective in paying our loans.
In brief:
- Monthly loan repayments and fortnightly payments are almost the same except for the frequency of payment schedule.
- Monthly loan repayments are made through monthly basis while fortnightly payments are done every after 2 weeks
- Paying through fortnights reduces your mortgage cost and loan term more than monthly loan repayments.