Extra Mortgage Payments Calculator
Discover how much interest you save and how many years you shave off your mortgage by making extra payments. See the power of prepayments on a $500,000 mortgage at 5%.
Quick Answer
$500/month extra
6.8 years
off your 25-year mortgage
Interest saved
$134,800
on a $500k @ 5% mortgage
Bi-weekly payments
3 years
saved with zero extra cash
Monthly Extra Payment Scenarios
Based on a $500,000 mortgage at 5% interest over 25 years (monthly payment: $2,908). All figures are approximate.
| Extra Monthly Payment | Payoff Time | Total Interest | Interest Saved | Years Saved |
|---|---|---|---|---|
| No extra payments | 25 yrs | $372,400 | — | — |
| +$100/month | 23.5 yrs | $337,200 | $35,200 | 1.5 yrs |
| +$250/month | 21.3 yrs | $294,100 | $78,300 | 3.7 yrs |
| +$500/month★ Best value | 18.2 yrs | $237,600 | $134,800 | 6.8 yrs |
| +$1,000/month | 14.5 yrs | $173,400 | $199,000 | 10.5 yrs |
One-Time Lump Sum Prepayments
Making a lump-sum payment at the start of Year 1 on a $500,000 mortgage at 5%, 25 years.
Lump Sum
$5,000
Years saved
0.8
Interest saved: $12,400
Lump Sum
$10,000
Years saved
1.6
Interest saved: $23,800
Lump Sum
$25,000
Years saved
3.8
Interest saved: $54,200
Lump Sum
$50,000
Years saved
7.1
Interest saved: $95,600
Monthly vs Bi-Weekly Payments
How it works: Bi-weekly payments = half your monthly payment paid every 2 weeks. Since there are 26 bi-weekly periods in a year (not 24), you effectively make one extra full month's payment annually — at no additional cost to your cash flow.
Understanding Prepayment Privileges
Most closed mortgages in Canada allow annual prepayments without penalty — but there are limits. Exceeding them triggers prepayment penalties that can cost thousands.
Annual Lump Sum
10–20%
Most lenders allow you to pay down 10–20% of the original mortgage amount annually without penalty.
Payment Increase
10–100%
You can increase your regular payment by 10–100% (lender-dependent) without penalty.
Penalty for Excess
3–6 months
Exceeding your prepayment privilege triggers the higher of 3 months' interest or the IRD penalty.
Frequently Asked Questions
On a $500,000 mortgage at 5% over 25 years, an extra $500/month saves approximately $134,800 in interest and pays off your mortgage 6.8 years early. The earlier you start making extra payments, the more you save — extra payments in year 1 have far more impact than the same payments in year 20.
Make extra payments if: your mortgage rate is above 5.5%, you're risk-averse, you're within 10 years of retirement, or the guaranteed return of paying down debt is more valuable than potential market gains.
Invest instead if: your mortgage rate is below 5%, you have a long time horizon (20+ years), and you're comfortable with market volatility. Historically, a diversified equity portfolio returns 7–9% annually, which exceeds most current mortgage rates.
A prepayment privilege is your right to pay down more than your regular payment without a penalty. Most Canadian lenders offer 10–20% annual lump sum privileges (based on the original mortgage amount) and payment increase options of 10–100%. For a $400,000 mortgage with a 15% privilege, you can pay up to $60,000 extra per year penalty-free.
Accelerated bi-weekly payments are the easiest win — you save $58,900 and 2.9 years on a $500k mortgage with no change to your monthly cash flow. Extra monthly payments give you more control and flexibility. Both strategies work well; the best choice is whichever you'll consistently follow.
Yes — and variable-rate mortgages often have the same or better prepayment privileges as fixed-rate mortgages. The penalty for breaking a variable-rate mortgage is typically just 3 months' interest (much lower than the IRD penalty on fixed-rate mortgages), making variable mortgages more flexible for aggressive prepayment strategies.
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