Canada
Canada overpayment calculator
See how much interest you would save, and how many years you would cut off the mortgage, by paying a little extra each month.
Your mortgage
Overpaying $200.00/mo
$59,219
saved in interest over the life of the loan
- Time cut off the mortgage
- 4 yrs 8 mos
- Interest without overpaying
- $275,826
- Interest with overpaying
- $216,607
An estimate to help you plan — not financial advice. Assumes the extra amount is paid every month for the life of the loan and applied to principal.
Canadian mortgages limit how much you can prepay each year — but within those “prepayment privileges” (commonly 15–20% of the original balance as a lump sum, plus a 15–20% payment increase), overpaying cuts your interest and shortens the amortization. This calculator shows the impact of using them.
How this calculator works
Most Canadian lenders let you pay a lump sum of 15–20% of the original principal each year and raise your regular payment by a similar percentage, penalty-free. Going beyond the privilege can trigger a prepayment charge.
Because these extras go entirely to principal, they save interest on every remaining payment and can knock years off a 25-year amortization.
Timing matters: a lump sum early in the term saves far more interest than the same amount near the end.
A worked example
A $500,000 loan at 6.5% over 25 years, adding $300/mo (within privileges):
- Time saved
- 4.3 years earlier
- Interest saved
- $102,459
Stay within your lender's 15–20% annual privilege to avoid a prepayment charge.
Who it's for
- You want to use your annual prepayment privileges well.
- You're comparing a lump sum against a payment increase.
- You want to shorten a 25-year amortization.
Frequently asked questions
How much can I prepay on a Canadian mortgage?
Typically 15–20% of the original balance as an annual lump sum, plus the option to raise your regular payment by 15–20% — the exact figures vary by lender.
Is there a penalty for overpaying in Canada?
Only if you exceed your prepayment privileges. Within the annual allowance, lump sums and payment increases are penalty-free.
How much interest do prepayments save?
Meaningful amounts — adding $300/month within privileges to a $500,000, 6.5% loan shortens it by years and saves substantial interest. See above.
When is the best time to make a lump sum?
As early as possible. A prepayment early in the amortization avoids interest on that amount for the whole remaining term.