Find out how much time and interest you save with extra payments. Compares 3 strategies: monthly extra, yearly extra, and one-time lump sum. Free 2026 calculator.
On a $300K mortgage at 6.5% with 30 years left, an extra $100/mo saves $50K+ in interest and pays off 4 years earlier. Doubling extra payments to $200/mo saves $80K+ and 7 years earlier. The key: even small extras compound significantly over time.
From proven strategies to the full Canadian mortgage calculator:
Every extra dollar you pay toward your mortgage principal reduces the balance that future interest is calculated on. In the early years of a 30-year mortgage, most of your payment goes to interest, not principal, so extra payments early on have an outsized effect. The same dollar of extra payment in year 3 can save three to four times as much total interest as the same dollar paid in year 15. That's why even modest monthly extras — $50, $100, $200 — add up to tens of thousands in saved interest over the life of the loan.
Monthly recurring extra: Add a fixed amount to every payment. Best for steady budgeters and people with reliable income. Easy to set up as an automatic payment through your lender's portal.
Annual lump sum: Apply tax refunds, bonuses, or savings once a year. Best for people with variable income (freelancers, commission-based workers, seasonal employees). Spreads the impact across the year instead of front-loading.
One-time prepayment: A single larger payment (inheritance, sale of an asset, RSU vest). Highest single impact, but most people don't have discretionary lump sums available.
Money used to prepay a 6% mortgage could otherwise earn 7-10% in a balanced investment portfolio, or pay down 19-29% credit card debt. Run the numbers: if your mortgage rate is below your investment expected return and you have no high-interest debt, investing often beats prepayment. If your rate is above 6.5% or you have credit card balances above 12%, prepayment is usually the better move. This calculator shows the pure mortgage side — pair it with an investment return estimate to make the full call.
Most Canadian and US mortgages allow prepayment up to a percentage of the original principal each year (commonly 15-20%) without penalty. Going over the limit, or paying off the full balance before the term ends, can trigger an interest differential penalty that wipes out the savings. Check your mortgage contract or call your lender before committing to a large lump-sum payment. For monthly recurring extras, penalties are rare — but always confirm first.