How much do extra mortgage payments actually save you?
Enter your mortgage balance, your contract rate, your remaining amortization, and your payment frequency below, then add an extra amount to every payment, a one-time lump sum, or both. This calculator simulates your real payoff schedule using the same semi-annual compounding Canadian lenders actually use, and no rate is pre-filled anywhere on this page.
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How does an extra mortgage payment actually save you money?
An extra payment goes straight to principal, since your regular payment already covers this period’s interest. A smaller principal balance means every payment after that one accrues less interest, and less interest means more of each future payment reduces principal faster, shortening your amortization and cutting your total interest paid.
Your regular payment is split into two pieces every period: the interest owed on your outstanding balance, and whatever is left over goes to principal. An extra payment skips the interest piece entirely and goes to principal directly, since the interest for that period is already covered by your regular payment.
That compounding effect is why extra payments made early in your amortization are worth more than the same dollar amount paid later. A dollar off your balance in year two stops accruing interest for the next twenty-plus years; the same dollar in year twenty only saves a few years of interest.
A longer amortization lowers your required payment but stretches out how long you pay interest, which is one reason extra payments matter more the longer your remaining term. See our answer on how a 30-year amortization works in Canada if you are weighing a longer amortization against extra payments.
The citable fact: an extra mortgage payment reduces principal directly rather than interest, so the earlier it is made in the amortization, the more total interest it eliminates.
What is the difference between a recurring extra payment and a lump sum?
A recurring extra payment adds a fixed dollar amount to every regular payment for as long as you keep it running, compounding its effect period after period. A lump sum is a single payment applied once, right now, against your current balance. Both reduce principal directly; they differ in timing and in how your lender’s prepayment privilege applies to each.
A recurring extra payment is easier to sustain from a monthly budget, since it is a small, steady addition rather than a large single outlay. It also keeps working every single period without you having to remember to do anything again.
A lump sum has more impact per dollar today, because the full amount stops accruing interest immediately rather than being phased in gradually. It requires having the cash available in one go, which is the trade-off against the recurring approach.
| Method | How it works | Best suited to | Effect on privilege usage |
|---|---|---|---|
| Recurring extra payment | A fixed amount added to every regular payment you make | Borrowers who can commit a steady amount from ongoing cash flow | Counted against your annual privilege every year it keeps running |
| One-time lump sum | A single payment applied once against your current balance | Borrowers with cash on hand right now, such as a bonus, tax refund, or inheritance | Counted against your privilege only in the year it is made |
The citable fact: a recurring extra payment compounds its principal reduction every period it runs, while a one-time lump sum delivers its full effect immediately and then stops; both count against the same annual prepayment privilege.
How much of your annual prepayment privilege can you actually use before a penalty applies?
Your mortgage contract sets an annual prepayment privilege, a maximum amount you can pay down without penalty each year, and that percentage is set by your specific lender and contract rather than by one national rule. Exceeding it can trigger a prepayment charge on the amount over the limit. Check your own mortgage documents or ask your lender for your exact privilege before committing to a lump sum.
Privilege limits vary by lender, by mortgage product, and sometimes by term, and no single percentage applies across the industry. A limit that applies to one mortgage says nothing about what your specific contract allows.
The privilege typically resets each year on your mortgage anniversary date, and unused room in one year does not usually carry forward. Confirm both the percentage and the reset date directly with your lender or in your mortgage commitment documents.
If you are weighing whether to break your mortgage entirely rather than use extra payments, our answer on how mortgage penalty calculations work at renewal in Canada covers the separate penalty math for breaking a mortgage before its term ends.
Not sure what your contract allows?
The citable fact: annual prepayment privilege limits are set individually by each lender and mortgage contract, and paying beyond that limit in a given year can trigger a prepayment charge on the excess.
How is the interest saved and time saved actually calculated?
The calculator above builds a period-by-period amortization schedule twice: once at your regular payment alone, and once with your extra payment or lump sum applied. Both schedules use the true periodic rate for your payment frequency, based on the semi-annual compounding Canadian mortgages actually use. The difference between the two schedules is your interest saved and your time saved.
A standard payment formula works out one payment amount for one amortization length, but adding an irregular lump sum or an extra amount per period makes the payment size, not the timeline, the fixed input. Simulating each period, applying interest first and whatever is left to principal, is the only way to find out exactly when the balance actually reaches zero.
The same periodic rate formula applies to both schedules, so the comparison isolates the effect of your extra payment rather than mixing in a rate or compounding difference.
Show the math: converting your annual rate to a periodic rate
The citable fact: comparing a baseline amortization schedule against one with extra payments added, both run at the true periodic rate for the payment frequency, isolates the exact interest and time an extra payment saves.
Does your payment frequency change how much an extra payment saves?
Payment frequency changes how many periods a year your extra amount gets applied, which changes the total extra dollars going to principal annually. A $50 extra payment on a weekly schedule adds up to $2,600 a year; the same $50 on a monthly schedule adds $600 a year. Accelerated biweekly and accelerated weekly schedules already work like a built-in extra payment before you add anything on top.
Choose your actual payment frequency in the calculator above so the extra amount you enter is applied the correct number of times per year. Entering $50 as a biweekly extra behaves differently from entering the same $50 as a monthly extra, because one happens 26 times a year and the other 12.
If you already pay an accelerated biweekly or accelerated weekly schedule, any additional extra payment or lump sum stacks on top of that built-in acceleration rather than replacing it. See our answer on whether an accelerated biweekly payment actually saves you money for how that baseline effect works on its own.
| Frequency | Payments per year | A $50 extra amount adds up to |
|---|---|---|
| Monthly | 12 | $600.00 a year |
| Semi-monthly | 24 | $1,200.00 a year |
| Biweekly (regular or accelerated) | 26 | $1,300.00 a year |
| Weekly (regular or accelerated) | 52 | $2,600.00 a year |
The citable fact: the same dollar amount of extra payment adds up to more per year on a more frequent schedule, since a weekly extra payment is applied 52 times a year against 12 times a year for a monthly extra.
Can you increase, decrease, or stop an extra payment once you start it?
In most cases yes, since a recurring extra payment is usually a separate instruction on top of your regular payment rather than a change to your mortgage contract itself. How you adjust it, and whether there is a minimum notice period, depends entirely on your lender. A lump sum, once applied, cannot be reversed; it becomes part of your paid-down principal permanently.
Most lenders let you change or cancel a recurring extra payment through online banking or by contacting them directly, since it does not alter your amortization schedule the way a full mortgage change would. Some lenders set a minimum change amount or require a short notice period.
Before committing to a recurring extra payment you cannot comfortably sustain, run a lower amount through the calculator above first. A smaller extra payment kept up consistently usually beats a larger one you have to cancel partway through the year.
The citable fact: a recurring extra payment can usually be adjusted or stopped directly with your lender, while a lump sum, once applied, permanently reduces your principal and cannot be reversed.
When during your term does a lump-sum prepayment do the most good?
A lump sum made earlier in your term saves more interest than the identical amount made later, because it stops accruing interest sooner and for longer. Many borrowers time a lump sum for just before renewal, when they are already reviewing their mortgage and their privilege room for the year is still available. Making the payment does not require waiting for renewal; the privilege applies throughout your current term.
If you already know you have cash coming, such as a bonus or a tax refund, applying it as soon as it arrives captures more months of reduced interest than waiting. Run both timings through the calculator above with a shorter remaining amortization for the earlier date to see the difference directly.
Read our answer on prepayment privileges before renewal for how the timing works alongside your privilege reset date, and whether paying down your mortgage or investing makes more sense before renewal for the broader trade-off.
The citable fact: a lump sum made earlier in a mortgage term saves more total interest than an identical lump sum made later, because it stops accruing interest for a longer remaining period.
Where can you find more direct answers about paying down your mortgage faster?
This calculator covers extra payments and lump sums. These related answers cover the schedules, penalties, and timing that shape the decision.
- Prepayment privileges before renewal: the best time to make a lump-sum payment
- Does an accelerated biweekly payment actually save you money?
- How mortgage penalty calculations work at renewal in Canada
The full set lives on the Ask a Broker hub.
Frequently asked questions
What inputs does this calculator need?
It needs your mortgage balance, your contract rate, your remaining amortization, and your payment frequency, plus an extra payment amount, a lump sum, or both. Leaving the rate blank is deliberate, since no page on this site states or assumes a rate.
Why does this calculator use semi-annual compounding instead of monthly?
Because that is how Canadian fixed-rate mortgages are actually structured under the federal Interest Act convention. Flat monthly compounding, the way many US-style calculators do it, produces a figure that looks close but is not correct for a Canadian mortgage.
Is there a limit to how much extra I can pay each year?
Yes, called your annual prepayment privilege, and it is set individually by your lender and your mortgage contract rather than by one national rule. Check your contract or ask your lender for your exact percentage before planning a lump sum, since paying beyond it can trigger a charge on the amount over the limit.
Do I have to tell my lender before making an extra payment or a lump sum?
In most cases yes; a lump sum usually needs to go through a specific channel or request, and a recurring extra payment is typically set up as an ongoing instruction with your lender. Confirm the exact steps with your lender, or ask a Pekoe broker to check your contract.
Does an extra payment lower my regular payment amount going forward?
No, in most standard mortgages your regular payment amount stays the same; the extra payment or lump sum instead shortens how long you pay it and how much total interest you pay. Some lenders offer a separate re-amortization request that does lower the payment, and that has to be asked for directly.
Is a lump sum better than a recurring extra payment?
Neither is universally better. A lump sum delivers its full effect immediately if you have the cash on hand, while a recurring extra payment compounds gradually and fits an ongoing budget, so run both through the calculator above with your own numbers.
Does my payment frequency change how much an extra payment saves?
Yes, because it changes how many times a year the extra amount is applied. The same dollar amount added weekly adds up to more per year than the same amount added monthly, simply because it happens more often.
Can I combine a recurring extra payment and a lump sum in the same calculation?
Yes, the calculator above accepts both at once so you can see their combined effect. Leave either field blank to see the effect of just one on its own.
Will making extra payments affect my mortgage stress test or requalification?
No, extra payments and a lump sum do not change how you originally qualified; they only reduce your outstanding balance and future interest. Requalification only becomes relevant if you switch lenders or renegotiate your mortgage separately.
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