Alex Leite
- Sep 24
- 3 min read

How to Pay Off Your Mortgage Faster: A Guide for Homeowners

Are you dreaming of a mortgage-free life? You're not alone. Many Canadians want to pay off their mortgage debt sooner rather than later. Let's explore how you can pay off your mortgage faster.

Is This Mortgage Pre-Payment Guide For You?

This guide is for homeowners who:

Have some extra cash each month.
Want to save on interest over the long term.
Are comfortable with their emergency savings.
Don't have high-interest debt to pay off first.

If this sounds like you, read on. We'll show you how to potentially save thousands in interest and own your home outright years earlier.

Mortgage Pre-Payments: Your Secret Weapon

Most Canadian mortgage lenders offer pre-payment options. These let you pay extra towards your mortgage without penalties. Below, we've listed some of the options and strategies:

Increase Your Regular Payments

Many lenders allow you to increase your regular payments by up to 30%.

Example:

Your current monthly payment: $1,997.08

Increase by 10%: Extra $199.78/month

New monthly payment: $2,196.78

Impact: On a $400,000 mortgage at 3.5% interest with a 25-year amortization, this 10% increase could help you pay off your mortgage three years, four months years earlier and save about $29,938.44 in interest.

Make Lump Sum Payments

Most lenders allow yearly lump sum payments of up to 30% of your original mortgage amount.

Example:

Original mortgage: $400,000 (3.5% interest rate)

Lump Sum Payment: $5,000 per year

Impact: If you can make a $5,000 lump sum payment each year, you could pay off your mortgage six years, three months earlier and save about $55,593.05 in interest.

Increase Payment Frequency

Switching from monthly to accelerated bi-weekly payments can make a big difference.

Example:

Monthly payment: $1,997.08

Accelerated bi-weekly: $998.54 every two weeks

Impact: This small change could help you pay off your mortgage three years earlier and save about $26,274.46 in interest.

Use Your Tax Refund

Instead of splurging, put your tax refund towards your mortgage. Even a small amount can make a big difference over time.

Combining Pre-Payment Options

Using multiple strategies together can have an even bigger impact. For example, combining accelerated bi-weekly payments with an annual lump sum payment could help you pay off your mortgage 7-10 years earlier, depending on your specific situation.

Is Paying Off Your Mortgage Early Always the Best Move?

While becoming mortgage-free is a great goal, it's not always the best financial move for everyone. Before using any of these options, Consider these points.

Do you have high-interest debt? Pay that off first.
Are you maximizing your retirement savings? This might be a priority.
Could you earn more by investing the extra money? Sometimes, investing can yield better returns than the interest saved on your mortgage.

Final Thoughts

Paying off your mortgage early can be a powerful way to build wealth and achieve financial freedom. But it's not a one-size-fits-all solution. Always consider your overall financial picture before making extra mortgage payments.

TL;DR:

Canadian mortgages often allow pre-payment options that can help you pay off your mortgage years earlier and save thousands in interest.
Strategies include increasing regular payments, making annual lump sum payments, and switching to accelerated bi-weekly payments.
While paying off your mortgage early can be beneficial, it's important to balance this goal with other financial priorities, such as high-interest debt repayment and retirement savings.