A few small changes - switching to accelerated bi-weekly, adding a little to every payment, an annual lump sum, or just rounding up - can knock years off your mortgage and save you tens of thousands in interest. Stack the ones you'd actually do and watch the payoff date move.
Balance, interest rate, and years left on your amortization.
Accelerated bi-weekly, extra on every payment, round up the payment, an annual lump sum, a one-time lump sum, or an annual payment bump.
See years and months saved, plus the total interest saved, compared to staying the course.
Most lenders cap penalty-free prepayments at 10-20% of the original balance per year, plus a matching payment-increase privilege.
In the first years of a mortgage, most of every payment is interest - the balance is big, so the interest charge is big. Any extra dollar you send skips the interest line entirely and kills principal directly.
That's why accelerated bi-weekly is the classic first move: paying half your monthly amount every two weeks sneaks in one extra full payment a year, and on a typical Manitoba mortgage that alone is three to four years and tens of thousands in interest.
Every lender limits how aggressively you can prepay. Most allow a lump sum of 10-20% of the original balance each year and a matching payment increase of 10-20%. Stay inside those and prepayments are free.
There's also a real question of whether prepaying is the right call versus investing the difference or clearing higher-interest debt first. Send me your situation and we'll sort out the order of operations.
Tools built by Jeremy LaHaie, mortgage professional with INVIS Inc., serving Winnipeg, Ste Anne, Steinbach, and all of Southeast Manitoba. Call or text (204) 995-7336.