Many Canadian mortgages allow prepayments of 10–20% of the original amount each year without penalty. Prepaying early has the biggest effect because it removes principal before most of the interest is charged.
How to use the Mortgage Prepayment Calculator
- Mortgage amount
- Interest rate
- Loan term
- Interest calculation method
- Periodic prepayment (monthly)
- Lump sum prepayment
- Month of lump sum
Results update as you type, and every field accepts the units shown in its menu.
How it works
Enter the mortgage amount, rate, term, interest calculation method, regular prepayment and any lump sum with the month it is paid.
Tips
- Get a written loan estimate and compare the APR, not just the interest rate.
- Include property tax, insurance, HOA fees and maintenance in your monthly budget.
- A larger down payment lowers the payment and can remove mortgage insurance.
- Rates change daily – use a current quote for the most accurate result.
Common mistakes to avoid
- Looking only at the monthly payment instead of the total cost of the loan.
- Forgetting closing costs and fees.
- Assuming home prices always rise.
Inputs explained
| Field | What to enter |
|---|---|
| Mortgage amount | Amount in your currency |
| Interest rate | In % |
| Loan term | Units: years, months |
| Interest calculation method | Choose one: Monthly (US & UK), Semi-annually (Canada) |
| Periodic prepayment (monthly) | Amount in your currency |
| Lump sum prepayment | Amount in your currency |
| Month of lump sum | A number |
What each result means
- Monthly payment = pmt([Monthly rate], [Loan term], [Mortgage amount])
- New repayment term = [Number of payments with prepayments]÷12
- Total interest without prepayments = [Monthly payment]×[Loan term] – [Mortgage amount]
- Total interest with prepayments = ([Monthly payment] + [Periodic prepayment (monthly)])×[Number of payments with prepayments] + [Lump sum prepayment] – [Mortgage amount]
- Interest saved = [Total interest without prepayments] – [Total interest with prepayments]
Example values
How the main result changes when Mortgage amount changes and everything else stays at the example values above:
| Mortgage amount | Interest saved |
|---|---|
| 200,000 | 78,481.05 |
| 300,000 | 90,993.71 |
| 400,000 | 98,887.66 |
| 500,000 | 104,331.62 |
| 600,000 | 108,316.25 |
| 800,000 | 113,762.19 |
Formula
Periodic rate i = (1 + r ÷ m)^(m ÷ 12) − 1 (m = 12 US, 2 Canada)Balance after lump sum = balance at that month − lump sumRemaining months = nper(i, payment + prepayment, balance)Worked example
Inputs — Mortgage amount: $400,000; Interest rate: 5.5 %; Loan term: 25 years; Interest calculation method: Semi-annually (Canada); Periodic prepayment (monthly): $250; Lump sum prepayment: $20,000; Month of lump sum: 24.
Results — Monthly payment = $2,441.57; Number of payments with prepayments = 228; New repayment term = 19 years; Total interest without prepayments = $332,469.78; Total interest with prepayments = $233,582.12; Interest saved = $98,887.66.
Frequently asked questions
What is a mortgage prepayment?
Paying more than your scheduled payment to reduce principal.
How much can I prepay without a penalty?
In Canada, often 10–20% of the original amount a year; in the U.S. usually unlimited.
Is a lump sum better than regular prepayments?
The earlier the money goes in, the more interest it saves.
What formula does the Mortgage Prepayment Calculator use?
Periodic rate i = (1 + r ÷ m)^(m ÷ 12) − 1 (m = 12 US, 2 Canada).