How Can Mortgage Prepayments Save You Thousands?

Yes, mortgage prepayments could save your thousands over the years! Just be sure to check with your lender to make sure they will allow them.

What is a prepayment?

A prepayment is any amount you pay in addition to your regular payments. This includes increasing the amount of your regular payments or making a lump sum payment to reduce or pay off your balance.

The sooner you can make your payments, the less interest you will pay over the long term.


Sarah has a $150,000 25-year mortgage with an interest rate of 5.45%. She wants to save money by using her prepayment privilege. How much can she save?

Assuming the interest remains the same over the life of Sarah’s mortgage, her monthly payments would be about $911. If Sarah increased her payments by $50 per month, she would pay off her mortgage 2 years sooner AND save $14,000 on interest!

If Sarah made a lump-sum payment of $15,000 in the second year of that same mortgage, she would pay off the mortgage more than four years earlier AND save over $33,000 in interest.
Please be sure to check your mortgage agreement first as not all  have prepayment privileges. For example, a closed mortgage may require to pay a penalty or fee for any prepayment.

Federally regulated financial institutions, such as banks, must show your prepayment options in an information box at the beginning of your mortgage agreement. It will include the terms and conditions of your prepayment privileges. Be sure to read your mortgage agreement carefully before signing and ask the lender to explain anything you do not understand.

Here are a few questions to keep in mind when looking for a mortgage:

  •  How much can I prepay without penalty or fee?
  •  Is there a minimum amount for a prepayment?
  •  When can I make prepayments?
  •  Are there any conditions or limitations?
  •  If there are fees or penalties, how much are they, and how are they calculated?


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If you have any questions regarding the above, please give us a call at 604-588-4466 or email us at We would be happy to help you save thousands!