Prepayment impact calculator
Layer lump sums or recurring increases to see how quickly you can retire your mortgage.
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Interactive calculator
Prepayment impact calculator
See how lump sums and recurring increases shrink your mortgage faster.
Calculation notes
Methodology for the prepayment impact calculator
See exactly how lump-sum or recurring prepayments shorten your mortgage amortization and reduce total interest — with dollar-by-dollar precision.
Model annual bonuses, tax refunds, monthly top-ups, or inheritance payments and watch the payoff date move closer.
Compare different prepayment strategies: a single $20K lump sum vs $200/month for 8 years — which saves more interest?
Build a realistic payoff acceleration plan that stays within your lender's prepayment privilege limits.
Inputs to check
- Current mortgage balance
- Interest rate and term
- Amortization remaining
- Prepayment amount and timing
Assumptions
- Assumes prepayments are accepted as entered and applied to principal immediately.
- Rates remain constant over the modeled term; variable rates will change actual outcomes.
- Does not include tax implications of prepaying vs investing.
- Results reflect mathematical impact — actual lender processing times may affect timing slightly.
How this calculator works
See exactly how lump-sum or recurring prepayments shorten your mortgage amortization and reduce total interest — with dollar-by-dollar precision.
Model annual bonuses, tax refunds, monthly top-ups, or inheritance payments and watch the payoff date move closer.
Compare different prepayment strategies: a single $20K lump sum vs $200/month for 8 years — which saves more interest?
Build a realistic payoff acceleration plan that stays within your lender's prepayment privilege limits.
Inputs you will need
- Current mortgage balance
- Interest rate and term
- Amortization remaining
- Prepayment amount and timing
Assumptions and limitations
- Assumes prepayments are accepted as entered and applied to principal immediately.
- Rates remain constant over the modeled term; variable rates will change actual outcomes.
- Does not include tax implications of prepaying vs investing.
- Results reflect mathematical impact — actual lender processing times may affect timing slightly.
Example scenarios
$15K annual lump sum
On $400K at 4.50% with 20 years remaining, $15K/year shaves ~8 years off amortization and saves ~$67K in interest.
Monthly top-up vs annual lump sum
$200/month extra saves more than $2,400/year lump sum because each monthly payment reduces the balance 30 days sooner.
Maximizing prepayment privileges
Most lenders allow 15-20% annual prepayment. On $500K, that is $75K-$100K/year — model the dramatic payoff acceleration.
Tax refund deployment
If your $8K tax refund goes to mortgage principal every year on $350K at 5.00%, you pay off ~7 years early and save over $90K in interest.
Related tools
Use this payment output in the next decision
Payment and amortization scenarios matter most when they connect to a rate, a contract strategy, and a broker-reviewed fallback plan if rates move or priorities change.
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Frequently asked questions
Do all lenders allow prepayments?
Most Canadian mortgage contracts include prepayment privileges — typically 15-20% of original balance in lump sums plus payment increase options up to 15-100%. Some allow doubling-up. Confirm your specific terms before making large payments — exceeding limits can trigger penalties.
Will prepaying change my monthly payment?
Depends on your lender. Some keep the payment same and shorten amortization. Others re-amortize, lowering your payment. Variable-rate mortgages: prepayments go entirely to principal. Confirm with your lender.
Is prepaying the same as refinancing?
No. Prepayments reduce your balance within your existing contract — no application, no credit check, no legal fees. Refinancing replaces your mortgage with a new one, potentially with penalties and qualification. Prepayments are simpler when you have surplus cash.
What is the best prepayment strategy?
Prepay as early and as frequently as possible — interest accrues on the outstanding balance, so every dollar of principal reduction saves interest immediately. A $200 monthly top-up typically saves more than a $2,400 annual lump sum because each payment reduces the balance 30 days sooner.
Should I prepay my mortgage or invest?
Prepaying at 5.00% gives a guaranteed, tax-free 5.00% return. Investing in a non-registered account at 7% after-tax might net 5.0-5.5%, similar but with market risk. If your mortgage rate is high and timeline short, prepaying often wins. If rates are low and timeline long, investing may outperform. The calculator shows the mortgage-side math.