Reply to 40% reductionby
Mostly banks make this claim because they change your repayment profile and make you pay half your monthly amount every fortnight.
This does two things.
Firstly, you are paying back the money slightly faster, every two weeks, so that reduces your interest.
Secondly you pay an extra month of payments per year as there are there are 26 fortnights a year compared with 24 1/2 months. This has quite a large imapact on the interest cost and principal repayment of your mortgage, especially if the mortgage is over 25 years.
It is worth looking into these claims as they can save you money.
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