How prepayments pay off your mortgage faster
Every dollar you prepay goes straight against your principal, the amount you actually owe. Because interest is charged on that balance, lowering it early means you're charged less interest for the entire rest of your mortgage. That's why even modest prepayments compound into real savings: a bit extra on each payment, a yearly lump sum when a bonus or tax refund lands, or a one-time lump today can each knock years off your amortization and save tens of thousands in interest.
Most Canadian mortgages come with prepayment privileges, often the ability to pay an extra 10–20% of your balance each year plus raise your regular payment, all without penalty. The trick is knowing your specific limits and putting a plan in place. Once you've seen your numbers, compare payment options with the payment calculator, or see whether a refinance could free up cash to prepay with.