This calculator shows how much sooner your mortgage is paid off, and how much interest you save, when you add a one-time lump sum or pay more than the required amount each month. An extra payment within your prepayment limit goes straight to principal, so it stops accruing interest for the rest of the amortization. More mortgage tools are in the mortgage calculator directory.
Before making a large extra payment, check how much your mortgage lets you prepay each year without a penalty (see prepayment privileges below).
What extra payments save on a $400,000 mortgage
A $400,000 mortgage at 5% over 25 years, paid monthly, has a payment of $2,326 and $297,926 of interest over its life. Adding a fixed amount to every monthly payment:
| Extra each month | Interest saved | Years saved |
|---|---|---|
| $100 | $26,430 | 1.9 |
| $200 | $48,298 | 3.6 |
| $300 | $66,733 | 5.0 |
| $500 | $96,188 | 7.3 |
Paying a lump sum of the same size on every anniversary instead:
| Lump sum each year | Interest saved | Years saved |
|---|---|---|
| $5,000 | $81,477 | 6.1 |
| $10,000 | $126,102 | 9.9 |
The rate is assumed not to change for the whole amortization; in practice it resets at each renewal, so treat these as estimates. The year-by-year schedule without extra payments is on the amortization calculator.
Why early extra payments save more
Early in a mortgage most of each payment is interest, because the balance is at its largest. A prepayment then removes principal that would otherwise have accrued interest for decades.
A single extra $10,000 on the same $400,000 mortgage at 5%, paid right after the twelfth payment of the year shown:
| Paid at the end of year | Interest saved | Payoff brought forward |
|---|---|---|
| 1 | about $21,900 | about 1.1 years |
| 5 | about $16,300 | about 0.9 years |
| 10 | about $10,600 | about 0.7 years |
| 15 | about $6,200 | about 0.5 years |
| 20 | about $2,700 | about 0.4 years |
Three ways to pay extra
- Lump-sum prepayments: a one-time payment against principal, often from a bonus, tax refund or inheritance. Most closed mortgages allow one or more a year up to a percentage of the original balance.
- A higher regular payment: raising the payment permanently, usually allowed up to a set percentage once a year. It works without having to remember a separate payment.
- Double-up payments: some lenders let you pay up to twice the regular amount on any payment date, with the extra going to principal. Whether it counts against your annual prepayment limit depends on the lender.
Switching to accelerated bi-weekly or weekly payments is a fourth way: it adds the equivalent of one monthly payment a year. The payment frequency guide works through what it saves compared with monthly payments.
Prepayment privileges and penalties
Prepayment limits are set in each mortgage contract, typically as a percentage of the original principal for lump sums and of the regular payment for increases, and unused room usually doesn’t carry forward. Paying more than the limit on a closed mortgage triggers a prepayment penalty:
Breaking a closed mortgage, paying it off early or prepaying more than your privileges allow usually costs the higher of 3 months' interest and the interest rate differential (IRD) on a fixed rate, and typically 3 months' interest on a variable rate; your mortgage contract sets the exact method and comparison rate, and a federally regulated lender must tell you how it calculates the penalty.The prepayment privileges guide compares how lenders set them, and the mortgage penalty calculator estimates the penalty if you go over. One major lender says its mortgages become open at the end of the term, which lets you prepay any amount at renewal; your contract says whether yours does. If you are still choosing a mortgage, prepayment limits are one of the terms worth lining up across offers; comparing mortgage offers has a worksheet.
Extra payments or investing?
A mortgage prepayment saves interest at your mortgage rate, which is certain on a fixed rate but can change on a variable rate; investing the same money may earn more or less, depending on returns, taxes and risk. The comparison, with a worked example and the order many households tackle debts and savings in, is on paying down the mortgage vs investing.
Related calculators
- Interest-only mortgage calculator: the opposite case, where payments cover no principal at first
- Mortgage recast: using a lump sum to lower the payment instead of the amortization
- Paying off a mortgage early: every way to shorten the mortgage
Sources
The figures and rules on this page come from these sources, last checked against them between September 25, 2026 and October 2, 2026. How we check facts.
- Bank of Canada: Mortgage rates, fixed 5 years and over: uninsured residential mortgages, funds advanced (data series)
- Department of Finance Canada: Boldest mortgage reforms in decades come into force today
- Financial Consumer Agency of Canada: How much you need for a down payment
- Financial Consumer Agency of Canada: Breaking your mortgage contract
- Financial Consumer Agency of Canada: Mortgage fees: Prepayment penalties
- Justice Laws (Canada): Interest Act
- RBC: Variable Rate Mortgage | RBC Royal Bank of Canada