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 refund at tax time? 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.
Put another way, each dollar of the lump sum saves about $1.47 in interest, while each dollar of monthly extras saves about 64 cents. Few of us have $20,000 sitting around, though, and a steady $200 is easier to find than a big cheque, so the better plan is usually the one you’ll stick with.
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 Financial Consumer Agency of Canada puts it this way:
A prepayment privilege is the amount you can put toward your mortgage on top of your regular payments, without having to pay a prepayment penalty.
Mortgage fees: Prepayment penalties, canada.ca
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.
Where do people trip up?
Two slips come up a lot. The first is paying extra without checking where it goes. Some lenders apply it to the balance straight away and others wait for your next payment date, so ask. The second is treating the privilege as a refillable bucket. Most lenders cap the yearly amount and don’t let you carry an unused allowance into next year, so a skipped year can’t be made up later.
Say Priya in Halifax gets a bonus every March. Putting it in as a lump sum, up to her lender’s limit, usually does more than dribbling the same money out over twelve months, since the balance drops sooner.
Which other calculators help with a payoff plan?
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.
Our sources
The payoff time and the interest come from a standard loan schedule with semi-annual compounding, which is how Canadian fixed-rate mortgages work. How much you may prepay is set by your own contract. This website has no connection with any lender or government body.
About this calculator
- What it does
- Estimate the interest and time you save by prepaying your mortgage.
- Category
- Mortgage
- Last checked
- September 30, 2026
- Result type
- Estimate for information only, not tax advice.
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