You have monthly mortgage repayments of $2 000. Cut that figure in half and it becomes $1000 for the fortnightly repayments. Over the year with the monthly repayments you have made $2
000 x 12 months, which=$24 000. Over the year with the fortnightly repayments you have made $1 000 times 26 fortnights in a year, not 24, a lot of
people get caught up on that one, which equals $26 000. Without even realising it you have made more repayments more often. Don’t stop there. Pay as much of your loan off as you
can as often as you can to reduce the principal amount that’s owing. The less the principal amount is, the less interest is payable which means you’ve got more money to pay off the principal, which in turn again lowers the interest. This is the snowball effect. Compounding interest working in your favour. We look at compound interest in a little
bit more detail in the investment topic, but once you understand this concept you will
pay off your loans much faster.