Mortgage Prepayment Calculator Canada - Extra Payment Savings Calculator

Calculate interest savings from extra mortgage payments in Canada. See how prepayments reduce your amortization period and total interest costs.

Calculate how extra mortgage payments can save you thousands in interest and reduce your amortization period. This Canadian mortgage prepayment calculator shows the power of additional principal payments on your home loan.

Mortgage Prepayment Strategies in Canada

Making extra mortgage payments is one of the most effective ways to build wealth and achieve mortgage freedom faster. Even small additional payments can save tens of thousands in interest.

Types of Mortgage Prepayments

Extra Monthly Payments: Add fixed amount to each payment
Lump Sum Payments: Annual prepayment (usually 10-20% allowed)
Increased Payment Frequency: Switch from monthly to bi-weekly
Payment Increases: Boost payments by 10-20% annually

Canadian Mortgage Prepayment Rules

Closed Mortgages: Most allow 10-20% annual lump sum prepayment without penalty

Open Mortgages: Unlimited prepayments but higher interest rates

Payment Increases: Many lenders allow 10-20% payment increases annually

Double-up Payments: Some mortgages allow doubling any scheduled payment

Bi-weekly Payment Strategy

Switching to bi-weekly payments (half your monthly payment every two weeks) results in 26 payments per year instead of 24 - equivalent to one extra monthly payment annually. This simple change can:

Reduce a 25-year mortgage to approximately 21-22 years
Save $50,000+ in interest on a typical $500,000 mortgage
Require no extra money - just payment timing changes

Prepayment vs. Investing

Consider mortgage prepayment vs. investing based on:

Mortgage Rate vs. Investment Returns: If investments earn more than your mortgage rate, investing may be better
Tax Considerations: Mortgage payments aren't tax-deductible, but RRSP contributions are
Risk Tolerance: Mortgage prepayment provides guaranteed "return" equal to your interest rate
Liquidity Needs: Investments are more liquid than home equity

When to Prioritize Mortgage Prepayment

High mortgage interest rate (over 5%)
Low risk tolerance
Already maximizing RRSP and TFSA contributions
Approaching retirement and want guaranteed debt reduction
Peace of mind from being mortgage-free

Note: Amortization assumes fixed rate, monthly compounding, fully amortizing schedule, no fees/penalties. Check your mortgage terms for prepayment privileges and restrictions. Consider your complete financial picture including emergency funds and retirement savings before making large prepayments.