Almost every closed mortgage in Canada lets you pay extra without a penalty. Most people know that vaguely. Far fewer know how much their own contract allows, how the allowance resets, or what a few thousand dollars of extra payments actually does to the mortgage.
This covers the two kinds of prepayment privilege, the limits the major lenders publish, and then runs one household's mortgage through the options, so you can see which changes move the numbers and which barely touch them.
Two kinds of privilege
A lump-sum privilege lets you pay a one-off amount straight onto the principal, usually up to 10% to 20% of the original amount borrowed, once in each year. On a $600,000 mortgage, a 15% privilege is $90,000 a year. The year may be the calendar year or the year from your anniversary date, depending on the lender, and unused room usually doesn't carry over.
A payment-increase privilege lets you raise your regular payment, typically by somewhere between 10% and 100%, depending on the lender and the product. The extra goes straight to principal on every payment.
Both are set out in the prepayment section of your mortgage contract. Here's how the lenders on our penalty pages describe their closed-mortgage privileges:
| Lender | Lump sum each year | Payment increase |
|---|---|---|
| TD | Up to 15% of the original amount | Up to 100% in total over the term |
| RBC | Up to 10% of the original principal | Up to 10%, once in each 12 months, plus a separate Double-Up option |
| Scotiabank | 10%, 15% or 20%, depending on the product | Matching the lump-sum limit |
| BMO | 10% on smart fixed; 20% on other closed mortgages | 10% of the current payment on smart fixed; 20% on others |
| CIBC | 10% on the standard fixed closed (10% to 20% by product) | Up to 100% of the regular payment |
| National Bank | Up to 10% of the initial principal | Up to one times the payment |
| Desjardins | Up to 15% of the original amount | Up to double the original payment |
| Simplii | As high as 20% on some mortgages | Up to 25%, once a year, on fixed terms of two years or more |
| First National | Up to 15% of the original amount | Up to 15%, fixed-rate only |
| Equitable Bank | 15% or 20%, depending on the mortgage | Not published in the source we checked |
Privileges differ by product even within one lender, so your own contract is the one to check.
One mortgage, seven ways to pay extra
Hannah and Dan owe $500,000 at 4.50%, with 22 years left on the amortization and five years left in the term. They originally borrowed $600,000, and their contract has a 15% lump-sum privilege. Their payment is an estimated $2,975 a month. Left alone, the mortgage costs about $285,500 in interest over the 22 years.
Here's what different kinds of extra payment do, as estimates:
| What they change | Mortgage-free sooner by | Interest saved this term | Interest saved over the life |
|---|---|---|---|
| $10,000 once, today | 8 months | $2,500 | $16,200 |
| $200 a month more | 2.2 years | $1,400 | $32,400 |
| Accelerated biweekly | 2.8 years | $1,800 | $40,700 |
| Payment up 10% ($298 a month) | 3.1 years | $2,100 | $45,600 |
| $10,000 every year | 6.8 years | $4,800 | $94,200 |
| $10,000 a year and payment up 10% | 8.2 years | $6,900 | $115,000 |
| Plain biweekly | none | none | none |
All of these sit inside a 15% lump-sum privilege and a 10% payment-increase privilege, which covers most of the lenders above.
What the table is really saying
Every dollar goes to principal, and principal stops charging interest. That's all a prepayment is. Each extra dollar on Hannah and Dan's mortgage avoids 4.50% a year for as long as the mortgage would otherwise have run. That's why the lifetime figures are large and the term figures are small: most of the saving arrives in the later years, when the mortgage is shorter than it would have been.
The two columns answer different questions. The "this term" figure is the dependable one, because the rate is set until then. The lifetime figure assumes 4.50% carries on after every renewal, which it won't exactly. It's most useful for comparing one option with another, not as a precise amount.
Keep the cost in view. $10,000 a year for the 15 years it takes to clear the mortgage is $150,000 of extra payments, and it saves about $94,200 of interest and nearly seven years. Put another way, each dollar prepaid avoids roughly 63 cents of interest over the life of the mortgage. It's also a lot of money that isn't available for anything else. Whether prepaying is the most useful place for spare cash depends on things like emergency savings, other debts and registered accounts, and that's a question about your whole situation, not just the mortgage.
Accelerated means more, not more often. Accelerated biweekly is the monthly payment divided by two, paid 26 times a year, which works out to one extra monthly payment a year. Plain biweekly, sized to match the monthly schedule, changes almost nothing. We went through every schedule in Weekly, biweekly or monthly.
A lump sum and a payment increase do much the same job. Dollar for dollar, they're close. A higher payment works automatically and suits a steady budget. A lump sum suits money that arrives once a year, like a bonus or a tax refund.
Earlier is worth more
The same $10,000 does very different things depending on where the mortgage is. On Hannah and Dan's $500,000 with 22 years left, it saves an estimated $16,200 of interest over the life. On a $180,000 balance at the same rate with seven years left, it saves about $3,500. Late in a mortgage, most of each payment is already principal, so there's less interest left to avoid.
That doesn't make late prepayments pointless. They still shorten the mortgage and clear it sooner. It just means the numbers are smaller, and the early years are where extra payments do the most.
Going over the limit
During a term, the amount above your privilege is usually treated like breaking part of the mortgage, and can carry a prepayment charge, typically three months' interest or an interest rate differential on the excess. How that's calculated is in How is a mortgage penalty calculated in Canada?.
At renewal, when the term has ended, most lenders accept any amount without a charge. That's why some people save through the term and prepay at renewal, and we walked through one of those in A renewal, a lump sum, and the January question. You may wish to confirm your own lender's rules before sending a large payment.
Trying your own numbers
The prepayment calculator runs your mortgage twice, once as it stands and once with the extra payments, and shows the difference in years and interest, over the term and over the life. Enter your privilege and original amount, and it flags any amount that goes over the limit. It runs in your browser, and nothing you type is sent to us.
If a renewal is coming up, the renewal calculator shows what a lump sum at renewal does to the new payment. And the calculators page lists every tool on the site, sorted by situation.
Hannah and Dan are an illustrative composite. Lender privileges are summarised from each lender's own published information as reviewed in September 2026 and vary by product. All figures are estimates using the semi-annual compounding Canadian fixed-rate mortgages use, and lifetime figures assume the rate never changes. Your lender's figures will differ, and nothing here is a recommendation.