Extra Mortgage Payment Calculator Canada

A regular mortgage payment first covers that period's interest and sends the remainder to principal. An extra payment bypasses the schedule and reduces principal directly. The following month's interest is then calculated on a smaller balance, creating a saving that repeats every month afterward.

The earlier a prepayment is made, the longer it has to work. A $5,000 lump sum in year one therefore saves more than the same lump sum near the end of the amortization.

A monthly increase is easier to automate and smooths the effect across the year. Annual lump sums suit bonuses, tax refunds, commissions, or other irregular income. Mathematically, paying sooner is slightly better, but consistency matters more than choosing the perfect timing.

This tool lets you combine both strategies. It adds the monthly amount to every scheduled payment and applies the annual amount after each twelve-month period.

Most closed mortgages allow a percentage of the original principal as a lump sum each year and a separate percentage increase to the regular payment. Common limits range from 10% to 20%, but the exact wording, reset date, and number of permitted payment changes vary by lender.

Open mortgages allow unrestricted repayment but usually carry a higher rate. Before sending a large payment, confirm the privilege with the lender and keep written confirmation that no charge applies.

A prepayment offers a predictable, tax-free saving roughly equal to the mortgage rate. It can be attractive after high-interest debt is cleared, emergency savings are funded, and employer retirement matches are captured.

Liquidity matters. Money paid into a traditional mortgage may be difficult to access again without refinancing. Homeowners expecting renovations, a move, parental leave, or variable income should preserve an adequate cash reserve.