Home Sweet Home. How to Pay Off Your Mortgage Faster

3 min read


  • Paying off your mortgage faster can save you thousands of dollars in interest
  • Every year, about one-third of mortgage holders take steps that will pay off their mortgages faster
  • You can pay it off faster by making lump-sum payments, increasing the amounts of your regular payments or increasing the frequency of your payments


Every year, Canadians buy into the dream of home ownership and most of them will need to finance their purchase with a mortgage. Purchase prices, interest rates, amortization periods all vary but one constant is that every homeowner wants to pay as little interest as they have to. In fact, every year, about one-third of mortgage holders take steps to decrease the amount they have to pay overall on their home financing.

But how?

There are actually quite a few ways that you can pay off your mortgage faster, and save many thousands of dollars.

One tip, before you get a mortgage, is to strive for as large a down payment as possible. The more you’re able to pay up front, the less you’ll have to finance and pay interest on. Another, of course, is to shop around for the lowest rates possible so you pay less interest over the term of your mortgage. Finally, you should try to pick the shortest amortization within your means. Usually, amortization periods are 25 years, but they can be longer or shorter. Making yourself pay off the mortgage in fewer years means your mortgage payments will be higher every month, but you’ll pay less in interest over time, saving you a lot of money.

If you already have a mortgage, here are a few common ways to pay it off faster:

Pay bi-weekly

Arranging your mortgage payments to be accelerated bi-weekly ones, instead of monthly ones, means you’re basically paying one extra mortgage payment a year (there are 52 weeks in a year so if you make payments every 2 weeks, that’s 26 payments or the equivalent of 13 monthly payments instead of 12). And that, over the life of your mortgage, means big savings. For example, if you have a 25-year mortgage of $300,000 at 3%, you could cut almost three years off your mortgage and save about $15,000.

Make lump sum payments

This is not always easy to do – juggling a mortgage and other debts while prices for basic goods and services seem constantly to rise can make it feel like there isn’t much left over at the end of the month, but there are ways you can try to squeeze out extra payments without too much pain. For instance, if your mortgage is with a credit union (and many of these have lower rates and more flexible terms), you can use your profit shares once a year to make an extra payment. Many other lenders also allow extra payments – such as the equivalent of 10% a year or more of the original principal. You can pay extra every month or once a year – make sure you talk to your lender and read your mortgage agreement thoroughly to see the rules on frequency of extra payments and amounts.

What many Canadians do is take any work bonus, pay raise or tax refund to pay extra on their mortgage. Since you’re already living on the money you have before these windfalls, it’s money you won’t notice when you put it towards your mortgage.

Round up your mortgage payments

Another relatively painless way to pay more on your mortgage (and make it a little easier on your monthly budgeting!) is to round up your mortgage payments to an amount you can afford. For instance, if you pay $578 bi-weekly on your mortgage, round that up to just $600, Over your 25-year mortgage, you’ll have paid almost $8,000 more on your mortgage, probably without noticing that extra $12 every two weeks you’re paying.

Stay informed

Once we get a mortgage many of us just pay it and forget it. But it’s important to keep abreast of current interest rates and to know your mortgage agreement options. If you are in a fixed term, it might still be worth the penalties to break your mortgage and apply for a lower rate if rates go down. Or, when your financing term is up and it’s time to refinance, if interest rates are lower, keep your payments the same when you refinance, so more of your money goes toward the principal.


Paying your mortgage faster means you have more money in your pocket – for retirement savings or other long-term goals – and have more equity sooner. That’s a win-win.







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