How much can I prepay on a Canadian mortgage?

Typical privileges allow a lump sum of 10% to 20% of the original principal per year plus the ability to raise your regular payment by a similar percentage. The exact terms are in your mortgage contract, and exceeding them triggers a prepayment charge.

When in the year should I make a lump-sum payment?

As early as possible, and check whether your privilege resets on the calendar year or your mortgage anniversary. A lump sum applies entirely to principal, so every month it sits unpaid is a month of interest you did not need to pay.

Is prepaying the mortgage better than investing?

Prepaying earns you a guaranteed, tax-free return equal to your mortgage rate. An investment has to beat that rate after tax and after risk to win. The higher your rate and the closer you are to retirement, the stronger the case for prepaying.

Does a lump sum lower my payment or my amortization?

By default it shortens the amortization and leaves the payment unchanged, which is where the interest saving comes from. Some lenders will re-amortize on request and lower the payment instead — that gives up most of the benefit.

Prepayment

Prepayment savings

What your prepayment privileges are worth: add an extra monthly amount and a yearly lump sum, within your lender's limits, and see the interest saved and the years cut.

Your scenario

Mortgage balance$540,000

$50,000$2,500,000

Interest rate4.84%

1.00%12.00%

Amortization25 years

5 years30 years

Extra monthly$200

$0$5,000

Annual lump sum$5,000

$0$100,000

Result

Interest saved

$113,825

Years off

7 years

Months off

80 mo

Base monthly P&I

$3,092

Closed mortgages commonly allow 10% to 20% of the original principal a year as a lump sum, plus a payment increase. Anything above your limit can trigger a penalty — check your commitment letter.

What this calculator answers

How much your lender's prepayment privileges save if you actually use them. It is the tool for a specific decision — “should I put this bonus on the mortgage?” To see how long your current payment takes, and how much sooner with accelerated bi-weekly payments, an extra monthly amount or a yearly lump sum, use the payoff timeline.

How much you can prepay without penalty

Every closed Canadian mortgage comes with prepayment privileges baked into the contract. Stay within those limits and you pay zero penalty for accelerating; exceed them and standard break-penalty math kicks in.

Published privileges at major lenders

TD: up to 15% of the original amount a year, and payment increases up to 100% of the original payment (details)
RBC: 10% lump sum and 10% payment increase, each once every 12 months (details)
Scotiabank and CIBC: 10%, 15% or 20% depending on the product (Scotiabank, CIBC)
National Bank: 10% lump sum, plus an extra payment of up to one regular payment (details)
Desjardins: 15% lump sum, payments up to double (details)
First National: 15% lump sum and 15% payment increase (details); MCAP: up to 20% lump sum (details)

Each figure is from the lender's own website, checked September 2026 and linked from its calculator page. Your commitment letter is what actually applies — products within one lender differ.

Strategies ranked by efficiency

Annual lump from bonus / tax refund — most efficient per dollar contributed. Best timing is right after bonus or tax refund hits.
Extra monthly amount — compounds smoothly. Best if cash flow has consistent slack.
Accelerated bi-weekly — automatic, adds ~1 extra month per year. Good for set-and-forget personalities.
Payment increase (one-time bump) — same as extra monthly but locked in for the term.

Why early years matter most

The same $5,000 lump sum in year 1 saves dramatically more interest than $5,000 in year 20 — because year 1 dollars stop generating interest for the next 24 years, while year 20 dollars only save 5 years worth. Compound your prepayments as early as possible in the amortization.

Should you prepay or invest?

Paying down a 4.84% mortgage = guaranteed tax-free 4.84% return. To beat it with investments, you need ~6.5%+ in a TFSA (more in a non-registered account after tax). Most Canadian borrowers come out ahead by prepaying first, then investing surplus.

Exception: if you haven't maxed your FHSA, RRSP, or TFSA contribution room — use those tax shelters first. Once they're full, mortgage prepayment wins for most situations.

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Questions about this calculator

How much can I prepay on a Canadian mortgage?: Typical privileges allow a lump sum of 10% to 20% of the original principal per year plus the ability to raise your regular payment by a similar percentage. The exact terms are in your mortgage contract, and exceeding them triggers a prepayment charge.
When in the year should I make a lump-sum payment?: As early as possible, and check whether your privilege resets on the calendar year or your mortgage anniversary. A lump sum applies entirely to principal, so every month it sits unpaid is a month of interest you did not need to pay.
Is prepaying the mortgage better than investing?: Prepaying earns you a guaranteed, tax-free return equal to your mortgage rate. An investment has to beat that rate after tax and after risk to win. The higher your rate and the closer you are to retirement, the stronger the case for prepaying.
Does a lump sum lower my payment or my amortization?: By default it shortens the amortization and leaves the payment unchanged, which is where the interest saving comes from. Some lenders will re-amortize on request and lower the payment instead — that gives up most of the benefit.