Mortgage Prepayment Options

Tips on how to pay down your mortgage sooner:

  1. You can accelerate your payments by choosing weekly, biweekly, semi-monthly and monthly payments. For example, with an accelerated weekly payment, we take your normal monthly payment and divide it by four. Since you pay 52 weekly payments, by the end of the year, you will have paid an equivalent of one extra monthly payment (reducing your overall interest).
  2. You can prepay up to 20% of your original mortgage amount each year. Depending on your mortgage type, you can prepay more than this percentage each year (see the chart below for your options). If you would like to prepay more on your mortgage, just let us know and we can apply these extra payments to the principal amount of your mortgage. Since you are prepaying on the principal of your mortgage, you can save thousands in interest and take years off your mortgage.

Below is a chart that explains your options, based on your mortgage, as well as how you can pay down your mortgage faster. Feel free to contact us if you have any questions or would like advice on what's best for your situation. We're here to help.

Mortgage prepayment example

Prepayment Penalties:

If you pay more than the prepayment option on your mortgage per year you may have to pay a penalty which is typically the greater of three (3) months interest or the interest rate differential.

A: Three months interest

Your outstanding mortgage balance x Annual interest rate x 3 months.
Example: ($100,000 x 5%) divided by 12 months multiplied by 3 = $1,249.99

B: Interest rate differential

The difference between the interest rate and our posted rate on the date you prepay your mortgage (with a term similar to the time remaining on the term).

Example Scenario:
Current mortgage rate:
5.00%
Months remaining on term:
24 months
Current interest rate on 2-year term:
3.00%
Interest rate differential:
2.00%
Example Calculations:
Multiply your mortgage balance by rate differential (to get rate differential for 1 year):
$100,000 x 2% = $2,000
Divide this amount by 12 (to get the amount for 1 month):
$2,000/12 = $166.67
Multiply the monthly amount by number of months left in term:
$166.67 x 24 = $3,999.99
Total interest rate differential penalty (if this applies to your mortgage):
$3,999.99

Additional Information:

Find out the estimated prepayment penalty that would apply if you prepaid the full amount of your mortgage with the Mortgage Prepayment Penalty Calculator.

Please note: The calculator is meant to provide an estimate only. The actual prepayment penalty or charge may differ from the estimate provided. For purposes of determining what the actual prepayment charge applicable to your mortgage will be, please contact us.