Extra Payment Savings Calculator
See how much interest you can save and years you can knock off your mortgage.
Mortgage Details
Illustrative default rate. Use the rate you were actually offered, or see today's rates.
Extra Payments
Applied once at the start of each year from the start year onward. Most lenders cap lump sums at 10–20% of the original balance per year.
Interest Saved
$122,423
$372,407 → $249,985 total interest
Time Saved
Year-by-Year Balance
| Year | Original Bal. | Accelerated Bal. | Int. Saved (Yr) |
|---|---|---|---|
| 1 | $489,614 | $481,927 | $287 |
| 2 | $478,702 | $462,939 | $676 |
| 3 | $467,237 | $442,990 | $1,085 |
| 4 | $455,192 | $422,031 | $1,514 |
| 5 | $442,538 | $400,010 | $1,966 |
| 6 | $429,242 | $376,875 | $2,440 |
| 7 | $415,274 | $352,569 | $2,938 |
| 8 | $400,598 | $327,032 | $3,461 |
| 9 | $385,180 | $300,203 | $4,011 |
| 10 | $368,981 | $272,015 | $4,589 |
| 11 | $351,962 | $242,400 | $5,196 |
| 12 | $334,081 | $211,286 | $5,833 |
| 13 | $315,295 | $178,597 | $6,503 |
| 14 | $295,558 | $144,253 | $7,207 |
| 15 | $274,822 | $108,171 | $7,947 |
| 16 | $253,036 | $70,261 | $8,723 |
| 17 | $230,147 | $30,433 | $9,540 |
| 18 | $206,099 | $0 | $10,334 |
| 19 | $180,834 | $0 | $9,631 |
| 20 | $154,290 | $0 | $8,352 |
| 21 | $126,403 | $0 | $7,008 |
| 22 | $97,103 | $0 | $5,597 |
| 23 | $66,320 | $0 | $4,113 |
| 24 | $33,979 | $0 | $2,555 |
| 25 | $0 | $0 | $918 |
How Extra Mortgage Payments Save You Money
Every extra dollar you put toward your mortgage principal directly reduces the amount of interest you pay over the life of the loan. Because mortgage interest compounds on the remaining balance, reducing that balance early has an outsized effect. An extra $200 per month on a $500,000 mortgage at 5% doesn't just save you $200 times 300 months — it can save you about $50,000 in interest and cut roughly three years off your amortization.
Prepayment Privileges by Lender
Most Canadian mortgages allow some form of prepayment without penalty. The standard privilege allows you to increase your regular payment by 15% to 20% per year and make lump sum payments of 10% to 20% of the original mortgage amount annually. Some products, particularly those from monoline lenders, allow up to 100% payment increases. Always check your mortgage contract — exceeding these limits triggers the same penalty as a full refinance.
Lump Sum vs. Monthly Increase Strategy
A consistent monthly increase beats occasional lump sums for most borrowers because it attacks the principal every month without requiring discipline or windfalls. However, the two strategies can be combined: increase your monthly payment by what you can afford, then apply annual bonuses or tax refunds as lump sums. The compounding effect is remarkable — even small, consistent extra payments made in the early years of a mortgage generate significantly more savings than larger payments made near the end.
The Compounding Power of Early Extra Payments
Consider this: on a 25-year mortgage, roughly two-thirds of your payments in the first 5 years go toward interest (about 67% at a 5% rate). By making extra payments during these high-interest years, you dramatically reduce the balance on which future interest is calculated. An extra $100/month starting in year 1 is worth more than $200/month starting in year 10. The earlier you start, the more powerful the compounding effect.