Could an Extra $100 a Month Save You Years on Your Mortgage?

Many homeowners spend weeks shopping for the best mortgage rate, comparing lenders, and calculating monthly payments before they buy a home. Once the paperwork is signed and the keys are in hand, most people simply make their payments and move on with life.

What often gets overlooked is how much control homeowners may have over their mortgage after closing.

A small change to your payment strategy could potentially save thousands of dollars in interest and help you pay off your mortgage years earlier than expected.

Why This Matters Right Now

The past few years have been challenging for many Canadian households. Rising grocery prices, higher insurance costs, increased utility bills, and fluctuating interest rates have stretched family budgets.

At the same time, some homeowners are finally finding a little breathing room as incomes increase, debts decrease, or financial situations stabilize.

When that happens, a common question comes up:

“Should I put extra money on my mortgage?”

The answer depends on your individual financial situation, but it is worth understanding what those extra payments can actually accomplish.

What Are Mortgage Prepayment Privileges?

Many Canadian mortgages include prepayment privileges, which allow homeowners to pay down additional principal without facing penalties.

Depending on your lender, these options may include:

Making a Lump Sum Payment

Some lenders allow you to make a large payment once per year. This could be a tax refund, work bonus, inheritance, or savings you’ve accumulated.

Because the payment goes directly toward the principal balance, you reduce the amount of interest charged over the remaining life of the mortgage.

Increasing Your Regular Payments

Many lenders allow borrowers to increase their scheduled payment by a certain percentage.

Even adding a small amount each month can reduce the total interest paid over time.

Switching to Accelerated Payments

Accelerated weekly or accelerated biweekly payments are another common option.

Instead of simply dividing your monthly payment into smaller amounts, accelerated payments result in one extra monthly payment being made each year. That additional principal payment can make a significant difference over the life of the mortgage.

Does It Really Make a Difference?

Let’s look at a simplified example.

Imagine a mortgage balance of $500,000 with an interest rate of 4.99% and a 25 year amortization.

The monthly payment would be approximately $2,905.

If nothing changes over the life of the mortgage, the homeowner would pay roughly:

• $371,554 in interest
• $871,554 in total payments

Now let’s compare a few different strategies.

Option 1: No Extra Payments

• Total interest paid: $371,554
• Mortgage paid off in 25 years

Option 2: $2,000 Lump Sum Payment Each Year

• Interest savings of more than $42,000
• Mortgage paid off approximately 2 years and 5 months sooner

Option 3: Rounding Up Payments

Increasing the payment amount each month can save tens of thousands of dollars in interest and shorten the mortgage timeline by more than a year.

Option 4: Accelerated Weekly Payments

In this example:

• More than $60,000 saved in interest
• Mortgage paid off approximately 3 years and 6 months sooner

The numbers can vary depending on the mortgage amount, interest rate, and lender rules, but the principle remains the same.

Small changes can have a surprisingly large impact over time.

Questions Homeowners Often Ask

Can I Make Extra Payments Whenever I Want?

Not necessarily.

Every lender has different rules regarding how much you can prepay and when those payments can be made.

Before making changes, review your mortgage agreement or contact your lender directly.

Will I Be Charged a Penalty?

Most prepayment privileges are designed to avoid penalties as long as you remain within the limits outlined in your mortgage contract.

Going beyond those limits could result in fees.

What If I Only Have an Extra $50 or $100 Per Month?

Many homeowners assume small amounts won’t make a difference.

The reality is that even modest increases can reduce interest costs and help pay down principal faster.

Mortgage repayment is a long game. Small improvements made consistently can add up over years.

Should I Pay Down My Mortgage or Invest?

There is no universal answer.

Some homeowners prioritize becoming mortgage free sooner. Others prefer to invest extra funds for long term growth.

The right choice depends on your financial goals, risk tolerance, retirement plans, and overall financial picture.

A financial advisor can help determine what makes the most sense for your situation.

What I See as a REALTOR®

Many buyers focus entirely on the purchase itself. They work hard to save for a down payment, qualify for financing, and secure a home in a competitive market.

Once the move is complete, conversations about mortgage strategy often stop.

Understanding your mortgage options after closing can be just as important as choosing the right property in the first place.

A mortgage is usually one of the largest financial commitments you’ll ever make. Taking advantage of available prepayment options may help you build equity faster and keep more money in your pocket over the long term.

You don’t need a lottery win or a massive inheritance to make progress on your mortgage.

Sometimes an extra $50, $100, or a small annual lump sum payment is enough to create meaningful savings over time.

If you’re a homeowner, it may be worth reviewing your mortgage and understanding what prepayment options are available to you.

You might be surprised at how much impact a few small changes can have.

Visit erincorcoran.ca for more real estate insights, local market updates, and homeownership tips.