Payment frequency is a setting you choose again when you refinance, and it can change how quickly interest accrues and how your cashflow lines up with your income.
For legal professionals, income often arrives in uneven patterns. Salaried solicitors are paid monthly or fortnightly. Barristers and partners may receive irregular fees or draws. A refinance is a natural point to match the repayment schedule to that reality, rather than carrying over whatever the old loan used.
Can You Change Payment Frequency When You Refinance a Home Loan?
Yes. When you refinance a home loan, the new lender will usually offer a choice of monthly, fortnightly or weekly repayments, though the options differ between lenders and products. Some lenders allow a change of frequency on an existing loan, so it is worth checking with your current lender first.
The frequency is part of the new loan contract. It sits alongside the loan amount, term, rate type and features such as an offset account or redraw. Confirm the schedule and first repayment date with the new lender before settlement.
How Weekly, Fortnightly and Monthly Repayments Differ
Monthly repayments are 12 payments a year. Fortnightly repayments are 26 payments a year, and weekly repayments are 52. The dollar amount per instalment is only part of the picture, because the number of instalments in a year is different for each.
If a lender simply divides the monthly amount by two to set a fortnightly repayment, you make 26 half-payments, which equals 13 monthly payments over a year. That extra month of repayments goes to the loan and reduces the balance sooner. If the lender calculates the fortnightly amount as the annual total (monthly x 12) divided by 26, the yearly payment total is the same as monthly, and any gain is small. Ask the lender which method applies, because the contract and the repayment calculator will show the difference.
An Illustrative Example at 6.75% p.a.
Consider a solicitor refinancing a $600,000 balance over a remaining 25-year term. At an illustrative rate of 6.75% p.a., the monthly principal and interest repayment is about $4,145. This example uses that rate only for illustration, and your actual rate will depend on your lender, deposit size and circumstances.
The solicitor is paid fortnightly and asks for a fortnightly schedule set at half the monthly amount, about $2,072. Over a year that is 26 payments totalling about $53,880, compared with about $49,740 on the monthly schedule. The extra roughly $4,140 a year goes toward principal and interest, so the balance reduces faster than it would on the monthly schedule.
The trade-off is cashflow. The solicitor needs to be comfortable with the higher annual outlay. Two months in most years will include three fortnightly payments instead of two, and the solicitor needs to make sure those months fit the budget. For a result tailored to your loan, use a repayment calculator or ask us to run the figures.
Ready to get started?
Book a chat with a Finance & Mortgage Broker at Lawyer Home Loans today.
Does Paying More Often Save Interest?
Paying more often can reduce interest slightly, because each payment lowers the balance sooner, but most of the saving usually comes from paying a higher total amount over the year. If your total annual repayments do not change, the effect of frequency alone is modest.
How interest is calculated depends on the lender. Many lenders calculate interest daily and charge it monthly, so a payment made earlier in the month reduces the balance on which later daily interest is calculated. The effect is real but small compared with changes to the rate or the extra repayment amount. If your goal is a lower interest rate, our page on getting a lower interest rate covers that approach directly.
Matching Payment Frequency to Legal Income Patterns
The most suitable schedule is the one you can sustain without drawing on credit, and for many lawyers that means aligning repayments with pay cycles. A salaried lawyer paid fortnightly may prefer fortnightly repayments, so the money leaves the account soon after it arrives.
Barristers, sole practitioners and partners with variable income face a different issue. Monthly repayments give a longer gap to collect fees, and some borrowers keep a buffer in an offset account to cover instalments. If your income is self-employed or irregular, see our information on self employed loans for lawyers for how lenders assess it.
The main risk of a more frequent schedule is that it leaves less room in a lean month. A monthly schedule with voluntary extra repayments, where the loan allows them, gives you flexibility without committing to a larger fixed outlay.
How Offset Accounts and Redraw Interact With Repayment Frequency
An offset account reduces the balance on which interest is charged by the amount held in the account, so the timing of your repayments matters less than how much sits in offset. Redraw lets you access extra repayments you have made, though some lenders limit or charge for redraw access.
When comparing loans during a refinance, check whether the offset is available on your chosen rate type, as some fixed rate loans limit offset or extra repayments. Fixed loans may also cap additional repayments, and early exit can trigger a break fee on a fixed rate loan. If you are coming off a fixed term, our page on fixed rate expiry explains what to review.
Costs and Checks Before You Switch Schedules
Changing frequency is rarely the reason to refinance, so weigh it against the full cost of switching. Costs can include a discharge fee, an application fee and, on a fixed loan, a break fee. ASIC's Moneysmart notes that these costs can reduce or outweigh the saving from a new loan.
A lender must also check that the loan is suitable. If a refinance lowers repayments only because the term is longer, you will pay more interest over that longer term, and the lender or broker should tell you so. Our loan health check compares your current loan with alternatives, and the home loan refinancing for lawyers page sets out how the process works for legal professionals.
If the refinance is for an investment property, interest deductibility depends on how the borrowed money is used, so speak with your accountant before making changes. Our investment loan refinancing for lawyers page covers the lending side.
Call one of our team or book an appointment at a time that works for you, and we will compare payment frequency options as part of your refinance.
Frequently Asked Questions
Can I change my repayment frequency when I refinance?
Yes. Many lenders offer monthly, fortnightly and weekly options on a new loan, though choices vary by lender and product. Confirm the schedule with the new lender before settlement.
Do fortnightly repayments pay off a loan faster?
They can, if the fortnightly amount is half the monthly repayment, because that adds up to 13 monthly payments a year. If the lender sets the fortnightly amount at the annual repayment total divided by 26, the effect is small.
Is payment frequency a good reason to refinance?
On its own, rarely. Switching can involve discharge, application and sometimes break fees, so the overall cost needs to be weighed against the benefit.
Which schedule suits lawyers with irregular income?
Monthly repayments give more time to collect fees, and voluntary extra repayments add flexibility where the loan allows them. A buffer in an offset account can also help cover instalments.
