Why Should You Consider Payment Frequency When Refinancing?

What Is Payment Frequency and Why Does It Matter?

When you're thinking about mortgage refinancing, most tradies focus on finding a lower interest rate or accessing equity. But here's something that doesn't get talked about enough - how often you make your repayments can have a massive impact on how much you actually pay over the life of your loan.

Payment frequency is exactly what it sounds like: how often you make mortgage repayments. You've got three main options - weekly, fortnightly, or monthly. And choosing the right one when you refinance mortgage could mean the difference between paying off your home years earlier or being stuck on high rate repayments for longer than necessary.

For tradies who get paid weekly or fortnightly, matching your mortgage repayments to your pay cycle just makes sense. It's about working with your cashflow, not against it.

How Different Payment Frequencies Work

Let's break this down with a real example. Say you've got a loan amount of $500,000 at a variable interest rate of 6% p.a.

With monthly repayments, you'd pay about $2,998 per month. Over 30 years, you'd pay roughly $579,191 in interest.

But here's where it gets interesting. If you switched to fortnightly repayments, you'd pay $1,384 every fortnight (which is half the monthly amount). Because there are 26 fortnights in a year instead of 24 (12 months divided by 2), you'd actually make an extra month's worth of repayments each year without really feeling it.

With this approach, you could:

• Pay off your mortgage about 4 years earlier
• Save around $65,000 in interest over the life of the loan
• Improve cashflow by aligning payments with when you actually get paid

Weekly repayments work the same way - you'd pay $692 per week (a quarter of the monthly amount), and because there are 52 weeks in a year, you'd make even more additional repayments.

Why This Matters When You Refinance

When you go through the refinance process, you're essentially starting fresh with a new loan. This is the perfect opportunity to set up a payment frequency that actually works for how you earn money as a tradie.

Most mortgage refinancing applications let you choose your payment frequency from the start. If you're coming off fixed rate and looking at your options, don't just focus on whether to switch to variable or switch to fixed. Think about how you want to structure those repayments too.

If you've been making monthly repayments and switch to fortnightly when you home loan refinance, you could potentially access a better interest rate AND set yourself up to pay less interest overall. That's a win-win.

Matching Your Payment Frequency to Your Income

As a tradie, you know that your income pattern is different from someone on a monthly salary. Whether you're running your own business or working for someone else, chances are you're getting paid weekly or fortnightly.

Here's what you need to consider:

Weekly or Fortnightly Income:

• If you get paid weekly, weekly mortgage repayments make it easier to budget
• Fortnightly payments work well if that's when your wages hit your account
• You'll never feel like you're waiting around with money sitting idle
• Your mortgage gets chipped away at more frequently, reducing the interest charged

Monthly or Irregular Income:

• If you invoice clients and get paid monthly, monthly repayments might suit you
• For tradies with irregular income patterns, self-employed loans can be structured around your cashflow needs
• You might want to combine monthly repayments with a refinance offset account so extra cash still works for you

The key is making it sustainable. There's no point setting up weekly repayments if you're going to struggle every week. But if the money's there when you get paid, why not put it to work immediately?

Other Refinance Features That Work With Payment Frequency

When you're looking at compare refinance rates and current refinance rates, also check out these features that complement your payment frequency strategy:

Offset Accounts:
A refinance offset account lets you park your savings and reduce the interest charged on your loan. If you're getting paid fortnightly but your mortgage comes out weekly, you can keep the extra in your offset account where it's still reducing your interest.

Redraw Facilities:
A refinance redraw facility means if you get ahead on your repayments (which happens faster with weekly or fortnightly payments), you can access that extra cash if you need it for a work vehicle, tools, or even to access equity for investment purposes.

Fixed vs Variable:
Whether you lock in rate with a fixed interest rate or go with a variable interest rate, you can still choose your payment frequency. Some tradies like the certainty of knowing exactly what comes out each week with a fixed rate, while others prefer the flexibility of variable rates that might drop.

When Should You Review Your Payment Frequency?

Your payment frequency isn't set in stone. Here are some times when it makes sense to review it:

1. When your fixed rate period ending: If you're coming off fixed rate, use this as an opportunity to reassess everything, including payment frequency
2. When your income pattern changes: Started your own business? Your payment needs might be different now
3. During a loan review or home loan health check: This is when you look at everything and make sure it still fits your situation
4. When you consolidate into mortgage: If you're rolling other debts into your home loan, think about the total payment amount and when it should come out
5. When interest rates change significantly: If you're accessing a lower interest rate through refinancing, you might be able to afford more frequent payments

Making the Switch During Your Refinance Application

The refinance application process is your chance to get everything right. When you move mortgage from one lender to another, you're not locked into the same payment structure you had before.

Most lenders are flexible about payment frequency - it's usually just a checkbox on the application. But it's worth discussing with your broker because some lenders have specific requirements or benefits tied to certain payment frequencies.

At Tradie Home Loans, we help tradies understand how all these pieces fit together. It's not just about finding you a lower interest rate (though that's important). It's about setting up your home loan refinancing in a way that actually works with your life and helps you save money refinancing in every way possible.

The Bottom Line on Payment Frequency

Changing how often you pay your mortgage might not sound as exciting as accessing equity or getting a better rate available, but it can have a real impact on your finances.

By making weekly or fortnightly repayments instead of monthly, you could:

• Save thousands in interest over the life of your loan
• Pay off your mortgage years earlier
• Align your repayments with your income
• Reduce loan costs without changing your lifestyle
• Improve cashflow by matching payments to when you actually get paid

When you combine smart payment frequency with a solid refinance to lower rate strategy, you're setting yourself up properly. And if you're also looking at whether to release equity to buy the next property or consolidate other debts, getting the payment structure right becomes even more important.

Don't just refinance because your current refinance rates look high or because you're paying too much interest. Refinance properly, with a plan that includes everything from your interest rate to how often you make repayments. That's when you'll really see the benefit.

If you're thinking about whether it's time to refinance, or you want to understand how changing your payment frequency could help you, call one of our team or book an appointment at a time that works for you. We'll run through your situation and show you exactly what's possible when you structure your mortgage around how you actually earn and spend money as a tradie.