Mortgage Prepayment Calculator (Canada): What Extra Payments Save in 2026

How is the payment built?

Canadian residential mortgages are quoted with interest compounded semi-annually, not in advance. The legal basis is Interest Act, section 6: a blended-payment mortgage must state the rate “calculated yearly or half-yearly, not in advance.” That is the semi-annual compounding this calculator uses.

The calculator turns that quote into a monthly rate by taking (1 + annual rate / 2) to the power of one-sixth, then subtracting 1. At 5 percent, half the rate is 2.5 percent, and the monthly rate is 1.025 to the power of 1/6, minus 1. The payment is the standard amortizing payment on that monthly rate, rounded to the nearest cent. Interest each month is the remaining balance times that monthly rate, also rounded to the cent. Principal is the payment minus that interest. An extra amount, and the anniversary lump sum, reduce principal and do not change the next contractual payment.

That rounding is why a bank’s schedule can differ by a few dollars and still be the same loan. Lenders also differ on whether the first period is a full month and on the day they apply a lump sum. A difference of hundreds of dollars means the rate, the balance, or the amortization you typed is not the disclosure. Match the disclosure. If the lender’s schedule still differs by more than rounding, their day count or their prepayment timing governs, not this page.

A payment with no extras can be cross-checked on the FCAC Mortgage Calculator. Match the balance, the rate, the amortization, and semi-annual compounding. That tool does not run the prepayment rows on this page. Those rows are next.

What do $200 a month and $5,000 a year save on a $400,000 mortgage?

On the $400,000 illustration at an assumed 5 percent over 25 years, $200 a month plus $5,000 a year saves $107,108.60 of interest and 97 months, about 8 years. The loan finishes in 203 payments instead of 300. Every dollar below is the output of the assumptions in the heading, run through the same function the calculator on this page uses. The 5 percent and the 4 percent are assumptions so the arithmetic can be checked. They are not offers, and they are not a September 2026 or October 2026 average. Replace them with the rate on your commitment before you treat the interest saved as yours.

The row that types both at once is the one to use if you will do both: $107,108.60 of interest and 97 months.

Do not add the $200-a-month saving to the $5,000-a-year saving. Those two rows are each measured against the untouched loan, so $48,296.95 plus $81,475.87 is $129,772.82, and that sum double-counts interest both prepayments would have avoided on the same balance. The row that types both at once saves $107,108.60. If you will actually do both, that is the number. The separate rows are there so you can see which privilege is doing the work.

The $200 row finishes in 258 payments, which is 21 years 6 months. The $5,000 row finishes in 227 payments, which is 18 years 11 months. Both together finish in 203 payments, which is 16 years 11 months. Time saved is 42 months, 73 months, and 97 months. The same rule applies to the months: do not add 42 and 73 and expect 115. The combined run saves 97.

$100 a month on this $250,000 illustration saves $11,294.42 of interest and 21 months.

A biweekly contract, a variable rate that changes, or a payment the lender recalculates after you prepay will not match these rows. Some lenders keep the payment fixed and shorten the amortization, which is what this tool does. Some lenders drop the payment and keep the amortization, which puts the interest back. Read which one your commitment does before you compare a screen to a statement. Those rows only count if the privilege allows the amount you typed.

How do prepayment privileges work in Canada?

A privilege lets you pay extra without a penalty, up to a cap written in the closed mortgage. It is not one national percentage. The Financial Consumer Agency of Canada (FCAC) says you can usually increase regular payments by a percentage and make lump sums up to an amount or a percentage of the original amount. The limits vary by lender, and most lenders cap the amount per year.

A closed mortgage is a promise to follow the amortization, with a written exception called the prepayment privilege. The exception is not a national percentage. It is a clause. Two limits show up in that clause again and again, and they are usually separate buckets. Using one does not automatically use up the other. The commitment is the only place that says whether they interact.

The first limit is the lump sum. Once a year, or on the payment dates the clause names, you may pay an extra amount up to a percentage of a balance the clause names. Sometimes that balance is the original principal. Sometimes it is the current principal. The percentage is the lender’s number for that product, not a figure this site publishes.

FCAC’s prepayment penalties page tells you to read that clause, and it explains the charge that applies when you pay more than it allows. As of that page, checked October 27, 2026, the charge on a closed term is usually the higher of three months’ interest and an interest rate differential (IRD). The worked version of that sentence is the penalty guide. Federally regulated lenders such as banks have a prepayment penalty calculator on their website. Use that calculator if you are past the privilege. This page does not compute the charge.

The arithmetic, once you have the clause, is ordinary. Allowed lump sum equals the percentage in the clause times the balance the clause names. On the $400,000 illustration, a clause that uses original principal means you multiply the percentage by $400,000. A clause that uses the current balance means you multiply by whatever is still owing on the date the clause allows the payment. This page does not fill in the percentage. If you type a lump sum larger than that product, the calculator will still show interest saved, and that figure will be wrong by the penalty.

The second limit is the payment increase. The clause lets you raise the contractual payment by up to a stated percentage, often once a year, or it lets you pay an extra full payment on a payment date, sometimes called a double-up. Those are payment privileges, not lump-sum privileges. The calculator’s “extra amount added to every monthly payment” is this bucket.

If the clause caps the increase at a percentage of the payment, the maximum extra is that percentage times $2,326.42 in the illustration, not that percentage times the balance. A double-up, if the clause allows one, is an extra payment of $2,326.42 on a payment date, not $2,326.42 every month.

FCAC says that normally, once you increase your payments, you cannot lower them until the end of the term. Raise only what you can keep paying. The same page says most lenders cap the amount per year and that typically you cannot carry unused room into the next year. Do not assume leftover room rolls forward. The clause says so, or it does not.

Under the FCAC Code of Conduct for mortgage prepayment information, a federally regulated lender must give you, every year, your prepayment privileges and the dollar amount you can prepay that year without a charge, how the charge is calculated, and where the lender’s calculators are. Find that dollar figure on your annual statement or in online banking.

Does a skip-a-payment put interest back after you have prepaid? Some contracts offer a skip once you have made extra payments. A skip is the opposite of a prepayment. This calculator does not model one. If you skip, the interest saved on this page is too high.

An open term is the product built to be prepaid. A closed term is the product with the limit and the charge. The rate difference between those products is a quote from the lender, not a number on this page. If you are choosing the product, the privilege and the penalty method belong in the same comparison as the rate. A cheaper closed rate with a small privilege is a bet that you will not need the money back and will not need to leave. What RBC, TD, Scotiabank, BMO, and CIBC published for a standard closed mortgage is the next table.

How much can you prepay at RBC, TD, Scotiabank, BMO and CIBC?

On the public pages checked October 27, 2026, the big banks’ published lump-sum caps on standard closed mortgages range from 10% to 20% of the original amount. Some products differ. The commitment governs, not this table.

The $5,000-a-year lump sum in the worked example is 1.25% of $400,000, inside every one of these caps; the big banks’ published caps range from 10% to 20% of the original amount.

Checked October 27, 2026 on each bank’s public page; credit unions, monolines and special products differ.

FCAC’s sample information box describes a “10+10” privilege: once per year, raise the monthly payment by 10% of the original payment and pay a lump sum of 10% of the original mortgage amount. That sample shows how a disclosure can read. It is not the cap at every bank in the table.

BMO also states you can make any lump sum at the end of the term and renew without a prepayment charge. For variable closed mortgages, BMO’s charge is three months’ interest. A cap says what you may pay. It does not say the dollar should go to the mortgage. That comparison is next.

Prepay, or invest in a TFSA or an RRSP

The calculator stops at the mortgage. The decision does not. Interest on the mortgage that bought the home you live in is not deductible, so a dollar of interest you never pay is an after-tax return equal to the contract rate, for as long as that rate is locked. There is no market path on which that particular return goes negative. The dollar is also illiquid. Getting it back means a refinance, a sale, or a readvance, each with a cost and a new underwriting. That trade is the whole point of the prepayment versus investing guide. Borrowing the equity back out to invest is a different strategy, the Smith Manoeuvre, and it is leverage, not a prepayment.

A TFSA has no second tax calculation. The return you earn inside it is already after tax. The comparison is whether the return you actually expect, after the risk you will actually hold through a bad year, beats the contract rate. This page does not publish an expected return for stocks, bonds, or a balanced fund. If you would leave the alternative dollars in a savings account or a GIC, type that rate in your own head and compare it with the mortgage rate on the disclosure. A GIC outside a TFSA is not the same comparison: interest on it is taxable, so the pre-tax GIC rate has to be grossed up by your marginal rate before it can tie the mortgage. The TFSA does not need that gross-up. The account order, including when the TFSA wins because you will need the dollar again, is the TFSA and RRSP priority guide.

An RRSP is not a TFSA with a deduction stapled on. The deduction arrives now, at the marginal rate on the contribution, and the withdrawal is included later, at the marginal rate in that year. If those rates match and the refund is spent, the RRSP does not beat a prepayment. If the contribution is deducted in a higher bracket than the eventual withdrawal, and the refund is assigned in advance to the mortgage or the TFSA, the RRSP can win. The brackets are yours. Look them up in the federal tax brackets guide and add your provincial rate. Do not borrow a bracket from a blog. The mechanics of the refund, and the room, are the RRSP playbook.

Two uses of the dollar outrank both the mortgage and the registered accounts, and the priority guide already says so. High-interest consumer debt is a certain non-deductible return at a rate no sober investment clears. The fair version of that comparison, for debt that is not the residence mortgage, is debt payoff versus investing. An employer match, on the matched slice only, is compensation. Declining the match to prepay principal donates that compensation. Take the match, then come back to the mortgage.

Whatever you choose, the interest figure on this page is not cash in the account this month. A dollar of interest avoided in year 16 is not a dollar you can spend in year 1. The calculator’s job is to show how large that later saving is, and how many payments disappear, so the hurdle rate has a size. It is not a forecast of a TFSA balance. One way people send the extra dollar without a lump sum is an accelerated payment.

Accelerated bi-weekly versus a prepayment

Accelerated weekly or bi-weekly payments are one extra monthly payment a year. The schedule on this page is monthly. A lender’s bi-weekly contract is a different payment count, and the two names that sound alike are not the same product.

A regular bi-weekly payment is the monthly payment times 12, divided by 26. You pay every two weeks, and the year still adds up to 12 monthly payments. You have changed the calendar, not the annual principal. Little extra interest is saved, and what is saved comes from paying slightly earlier in the year, not from paying more.

An accelerated bi-weekly payment is half the monthly payment, paid 26 times. Half of $2,326.42 is $1,163.21. Twenty-six of those payments are $30,243.46, which is exactly 13 monthly payments of $2,326.42. The thirteenth payment is a prepayment. Accelerated bi-weekly is not a lower rate. It is one extra monthly payment a year, applied every two weeks instead of as a lump sum on the anniversary. FCAC describes accelerated weekly or bi-weekly payments the same way: the equivalent of one extra monthly payment per year.

This tool cannot take a bi-weekly frequency. The monthly stand-in is one twelfth of the contractual payment, typed in the extra-amount box. One twelfth of $2,326.42 is $193.8683…, and the cent this calculator uses is $193.87. Twelve payments of $193.87 are $2,326.44, two cents more than one monthly payment, because of that rounding. Running $193.87 as the extra monthly amount, with no anniversary lump sum, produces 259 payments, $250,861.62 of interest, $47,064.36 of interest saved, and 41 months saved. That row is in the table above.

A lender’s accelerated schedule will not match those figures to the cent. Payments land every 14 days, the first period may be short, and the lender’s rounding may differ. Expect a gap larger than two cents. Also check the privilege. An accelerated schedule that raises the annual amount you pay above the payment-increase clause can be a penalty problem even though the bank set the frequency up for you. Ask the lender to confirm the accelerated payment sits inside the privilege before you treat it as free. Past that privilege, the charge is a different calculation.

When a prepayment becomes a penalty

Inside the privilege, there is no charge: extra principal, the same contractual payment, less interest, and fewer months. Outside the privilege, or when you pay the closed mortgage off before the end of the term, the lender adds a prepayment charge.

FCAC describes that charge, on a closed fixed term, as usually the higher of three months’ interest and an IRD. Lenders differ. Federally regulated lenders such as banks have a prepayment penalty calculator on their website. Use that calculator. This one does not compute a penalty, and it will not warn you that the lump sum you typed is past the clause.

The reason a fixed term can produce a large IRD, and many variable terms produce three months’ interest only, is the IRD penalty guide. Why a fixed term carries that risk, and many variable terms do not, is also the fixed versus variable framework. FCAC’s own illustration lives on the penalties page: a $200,000 balance at 6 percent with 36 months left, a $3,000 three-month charge, and a $12,000 differential, so the penalty is $12,000. Those are FCAC’s inputs, not a rate on offer. A discount off the posted rate can make a real penalty larger than the simple gap. Paying $200 extra inside the privilege is not that transaction. Refinancing to “get a head start” on the balance can be.

FCAC’s tips on that page are practical. Use your prepayment privileges every year. Make a lump-sum prepayment before you break the mortgage, because the penalty is then calculated on a lower balance. Consider waiting until the end of the term to prepay a large amount. Shop around at renewal.

If the penalty is the price of a lower rate, the renewal guide is the shopping question, not this page. Run the interest this calculator says you would save by staying and prepaying inside the privilege. Then put the lender’s penalty beside it. A saving that arrives over 16 years does not automatically beat a charge that is due now.

When is the best time to prepay: during the term or at renewal?

During the term, stay inside the privilege. At renewal, a large prepayment is often cheaper, because the charge is usually zero when the closed term ends. FCAC says to consider waiting until the end of the term to prepay a large amount, and to shop around at renewal.

The tool holds one rate for the whole amortization. A five-year term at 5 percent, followed by an unknown renewal, is not one 25-year rate. The interest in the table is what happens if that assumed rate never changes. When the renewal offer is in writing, run the calculator again on the remaining balance, the new rate, and the remaining amortization. That second run is the prepayment decision for the next term. The first run was the decision for this one.

Maturity is the date the closed term ends. The penalty guide on this site says the charge is usually zero then, which is why the 2026 renewal guide tells you to shop before you are locked in again. A lump sum made before the new term starts reduces the balance that gets renewed. Confirm the renewal letter before you move the money. An automatic renewal can start a new closed term on a date you did not shop, and the privilege and the penalty come back with it. BMO’s page, checked October 27, 2026, says you can make any lump sum at the end of the term and renew without a prepayment charge.

A prepayment during the term and a prepayment at maturity are different sizes of decision. During the term you are limited to the clause. At maturity you can usually pay any amount, including the whole balance, and renew or switch what remains. The straight-switch rules, the stress test, and the $3,000 cost allowance are the renewal guide’s subject. This calculator does not know whether your file is a straight switch. It only prices the balance you still choose to carry.

If the renewal rate is lower and you keep the old payment, the difference is itself a prepayment. Type that difference in the extra-amount box on the new run. If you spend the difference, the amortization stretches back out and the interest saved on this page never happens. The renewal guide’s line about a lower payment you spend being a longer amortization in disguise is the same point.

Before you prepay

Five checks, from the annual statement and the commitment, before the money moves.

• Find the dollar amount you can prepay this year without a charge, on your annual mortgage statement or in online banking.
• Confirm whether the cap is on the original amount or the current balance, and the date window the clause allows.
• Confirm whether the contractual payment stays fixed after a prepayment.
• Confirm the mortgage payment is up to date.
• For a large amount near maturity, compare waiting until renewal, when the charge is usually zero.

What will this not tell you?

• Your prepayment privilege in dollars. The percentage, the balance it multiplies, and whether unused room carries forward are in the commitment. FCAC says unused room typically does not carry into the next year, and the Code of Conduct requires the lender to state the dollar amount you can prepay this year without a charge. FCAC’s prepayment pages are the consumer explanation of the charge when you exceed it.
• The interest rate differential for breaking a closed term. Paying $200 extra inside the privilege is not the same as refinancing. The penalty guide walks through FCAC’s example. Use the lender’s calculator before you break anything.
• Whether the extra dollar beats a TFSA or an RRSP. This tool only prices the mortgage side. The neighbouring articles are the comparison, including the refund and the bracket. This page does not name an investment return.
• Tax deductibility on a rental. Interest on the home you live in is not deductible, so the interest saved is not a tax event. Interest on a rental can be. Prepaying a deductible loan is a different decision, because the hurdle is the after-tax cost of the interest, not the contract rate itself. This page does not split them. A tax professional should look at a file where the interest might be deductible. This page is not that review.
• A variable rate that resets, a bi-weekly day count, or a payment the lender recalculates downward. Those schedules will not match. Match the disclosure. For the commitment itself, ask the lender, or a mortgage professional who will read that contract.

Frequently asked questions

Why is my bank’s payment a few dollars different?

The payment here is rounded to the cent, and interest is rounded to the cent each month, on the semi-annual rate the Interest Act requires a blended payment to state. Lenders differ on when they round and on whether the first period is a full month. A few dollars on the payment is rounding. Hundreds of dollars means the rate, the amortization, or the balance you typed is not the disclosure. On the $400,000 illustration at an assumed 5 percent, this calculator’s payment in 2026 is $2,326.42.

Does the lump sum happen in month one?

No. It happens on each anniversary payment: month 12, month 24, and so on, after that month’s regular payment and after any extra monthly amount. If you will make the lump sum at the start, the interest saved will be a bit higher than this tool shows. The tool’s timing is stated so the $107,108.60 on the 2026 illustration can be reproduced.

Can I type a biweekly payment?

Not as a frequency. The schedule is monthly. Do not divide the monthly payment by two and call it the bank’s accelerated bi-weekly. Accelerated bi-weekly is half the monthly payment, paid 26 times, which is 13 monthly payments a year. FCAC calls that one extra monthly payment. The monthly stand-in on the $400,000 illustration is an extra $193.87 a month, which saves $47,064.36 and 41 months. A regular bi-weekly payment still adds up to 12 monthly payments and is not the same prepayment.

What if the rate changes at renewal?

The tool holds one rate for the whole amortization. The 5 percent rows are an assumption so the 2026 illustration can be checked, not a renewal offer. Run the remaining balance at the new rate when the renewal offer is in writing, and type only the prepayment the new term allows. The shopping decision around that offer is the 2026 renewal guide.

Should I prepay the mortgage or contribute to a TFSA?

On a principal residence, prepaying earns a certain after-tax return equal to the contract rate, and the dollar is illiquid. A TFSA contribution earns whatever return you actually get, with no tax on the growth, and you can withdraw it. Compare that expected return with the rate on your disclosure. This page does not name a TFSA return. On the 2026 illustration, $200 a month plus $5,000 a year avoids $107,108.60 of mortgage interest. The priority against RRSP room and an employer match is the TFSA and RRSP guide.

Does accelerated bi-weekly count as a prepayment?

Yes. Half the monthly payment, 26 times a year, is 13 monthly payments. FCAC describes accelerated weekly or bi-weekly payments as one extra monthly payment a year. On the $400,000 illustration that extra monthly payment is $2,326.42, and the monthly stand-in of $193.87 saves $47,064.36 over 41 months. Regular bi-weekly, which spreads 12 monthly payments over 26 dates, is not that extra payment. Confirm the accelerated amount still fits inside the payment-increase privilege.

When does a prepayment trigger a penalty?

When you pay more than the privilege, or you pay a closed mortgage off before the term ends. FCAC says the charge is usually the higher of three months’ interest and an interest rate differential. In FCAC’s example, a $200,000 balance at 6 percent with 36 months left, against a 4 percent posted rate, is about $3,000 versus $12,000, so the penalty is $12,000. Use the lender’s penalty calculator for your own dollar figure. This tool assumes the amount you type is allowed. The method is the penalty guide.

Can I prepay any amount at renewal?

At maturity the prepayment charge is usually zero, so a lump sum before the new term starts can be larger than the annual privilege. FCAC suggests considering a wait until the end of the term for a large prepayment. Confirm that on the renewal letter. An automatic renewal can start a new closed term and put the privilege back in force. After you renew, you are back to the new clause. Rerun this calculator at the new rate. BMO’s public page, checked October 27, 2026, says you can make any lump sum at the end of the term and renew without a prepayment charge.

Can I carry unused prepayment room into next year?

Usually no. FCAC says most lenders cap prepayment privileges each year and typically you cannot carry unused room into the next year. That was still the rule to plan around on October 27, 2026. Use the dollar amount on this year’s statement in this year. The commitment is the exception only if it says the room carries forward.

How much can I prepay at the big banks?

On each bank’s public page on October 27, 2026, the standard closed-mortgage lump-sum cap was up to 10% of the original amount at RBC and at CIBC, which is $40,000 on a $400,000 mortgage. It was up to 15% at TD and at Scotiabank, which is $60,000. It was up to 20% at BMO, which is $80,000, or 10% and $40,000 on BMO Smart Fixed. Payment-increase rules differ, and some products differ. The commitment governs. The $5,000-a-year illustration is 1.25% of $400,000, inside every one of those caps.

Sources

• Justice Laws: Interest Act, section 6, checked October 27, 2026
• FCAC: prepayment penalties, checked October 27, 2026
• FCAC: paying off your mortgage faster, checked October 27, 2026
• FCAC: Code of Conduct, mortgage prepayment information, checked October 27, 2026
• FCAC: sample information box, fixed-rate mortgage, checked October 27, 2026
• FCAC: Mortgage Calculator, checked October 27, 2026
• RBC: pay down your mortgage, checked October 27, 2026
• TD: mortgage products, checked October 27, 2026
• Scotiabank: closed-term fixed-rate mortgages, checked October 27, 2026
• BMO: pay your mortgage faster, checked October 27, 2026
• CIBC: fixed-rate closed mortgage, checked October 27, 2026
• Canadian mortgage guide — semi-annual compounding and the illustrative $2,767 payment on $500,000 at 4.50 percent.
• IRD versus three months’ interest
• Mortgage renewal in 2026
• Prepayment versus investing
• Prepayment versus TFSA and RRSP

Related reading

• Real estate hub — the mortgage, tax, and housing decisions this calculator sits beside.
• Canadian mortgage guide — the contract, the semi-annual payment, and the illustrative $2,767 on $500,000 at 4.50 percent.
• Mortgage renewal in 2026 — when a large prepayment is usually free of a penalty, and how to shop the next term.
• Prepayment penalty and the IRD — the charge for paying more than the privilege or for breaking the term.
• Fixed versus variable — why a fixed term can produce a large interest rate differential and many variable terms do not.
• Prepayment versus investing — the contract rate as a certain after-tax return, against keeping the dollar invested.
• Prepayment versus TFSA and RRSP — the order against an employer match, TFSA room, and RRSP room.