Adding $200 a month to a $400,000 mortgage at 4.85% saves $27,498 in interest and clears the loan 2.3 years sooner. Try your own balance, rate and extra amount below, and see what it does for you.
Why does a little extra help so much?
Every extra dollar goes straight to principal. A smaller balance means less interest next month, and that saving repeats on every payment after it. The effect is strongest early, while the balance is big, and fades as the loan shrinks. So a small monthly amount in the first years can beat a larger one much later. Got a bonus or a tax refund? Put it in early in the term, where it does the most good.
Monthly extras or a lump sum?
The table sets the two side by side on the same $400,000 balance, with 20 years left at 4.85%. The first row is your baseline.
| Approach | Payoff time | Interest paid | Interest saved |
|---|---|---|---|
| Regular payments only | 20.0 years | $223,090 | None |
| $200 extra every month | 17.8 years | $195,593 | $27,498 |
| $20,000 lump sum today | 18.4 years | $193,762 | $29,328 |
What the numbers look like on $400,000
You owe $400,000 at 4.85% with 20 years left on the amortization. The regular payment is $2,596.21, and if you change nothing you’ll pay $223,090 in interest by the end.
Add $200 a month and the payment becomes $2,796.21. The loan’s gone in 17.8 years, the interest drops to $195,593, and you keep $27,498.
Or forget the monthly habit and put $20,000 against the balance today. The payment stays at $2,596.21, the loan ends in 18.4 years and the interest is $193,762, so you save $29,328. That’s a bit more than the monthly plan, but you’ll hand over $20,000 in one go instead of $200 at a time. The extra monthly payments add up to about $42,700 over 17.8 years, which makes the lump sum the far smaller outlay for a similar gain.
What should I check before paying extra?
Read your contract. Lenders set their own limits on extra payments, and going over them can bring a penalty. The calculator doesn’t model those limits or any penalty, so take the saving as the best case, and don’t be surprised if your lender’s rules trim it. It also holds your rate fixed for the whole stretch, while a real mortgage renews at whatever rate is offered then.
One more thing. Extra mortgage payments only make sense if you have an emergency fund and no higher-rate debt, because a card at a much higher rate costs you more than the mortgage does.
To see how each year of the balance responds, use the mortgage amortization schedule calculator. If you’re thinking of breaking the mortgage to move faster, price the charge first with the mortgage penalty calculator. At renewal, the mortgage renewal calculator shows your new payment, and the mortgage refinance calculator tests a move to a new loan.
Where do the numbers come from?
The payoff time and the interest come from a standard loan schedule with semi-annual compounding, which is how Canadian fixed-rate mortgages work. The Financial Consumer Agency of Canada publishes guidance on prepayment options. How much you may prepay is set by your own contract. This website has no connection with any lender or government body.
Frequently asked questions
What does $200 extra a month save?
On a $400,000 balance at 4.85% with 20 years left, it saves $27,498 in interest and shaves off 2.3 years.
Does a lump sum beat monthly extras?
In the example, a $20,000 lump sum today saves $29,328 and cuts 1.6 years, a little more than the $200 monthly plan.
Does the calculator count prepayment penalties?
No, it shows the saving only. Check the limits in your contract, since going over them can trigger a penalty.
When do extra payments do the most?
Early in the loan, while the balance and the interest are at their highest.
What's the regular payment in the example?
$2,596.21 a month on a $400,000 balance at 4.85% over 20 years.
Sources and updates
Updated: . How we check rates · Editorial team · Updates
Estimate only. These figures are a planning estimate, not tax, legal or accounting advice. Tax-Services.ca is an independent publisher: we don't prepare or file tax returns, and we don't offer tax, legal or accounting services. We have no connection with the Canada Revenue Agency, Revenu Québec or any provincial government. Your real amounts depend on details this tool cannot see, so confirm them with an official source or a qualified professional before you act.