Whether you’re juggling too many expenses, or just want to increase your cash flow, there are plenty of reasons why any Canadian homeowner would be happy to pay off their mortgage early. Regardless of your motivation, these no-nonsense, early payoff strategies can help you pay off your mortgage faster so you can save money and get on the fast track to enjoying a debt-free life.

Make Additional Mortgage Payments

Committing to making more mortgage payments can accelerate your ability to pay off your loan entirely. You’ll want to check with your lender to ensure the additional payments are applied to the mortgage in the correct way to reduce the principal and not prepay the interest.

Choosing to make a few extra monthly mortgage payments could help you pay down the principal which can save you tens of thousands of dollars in interest over the life of your loan. Depending on your situation, it might be a better option than refinancing because if you find yourself unable to make an additional payment, there’s no penalties or fees to worry about.

Increasing Payment Amount

If you have the financial flexibility, consider choosing a longer amortization period and then increasing your regular payments using your mortgage loan prepayment privileges. For example, if your regular monthly mortgage payment is $1,000, you could increase this to $2,000 per month, if your terms allow for increased payments. This process would essentially allow you to pay off a 20-year mortgage in just 10 years and will also give you the flexibility to switch back to making your regular required monthly payments should you encounter any financial strain or unplanned expenses.

Refinancing Your Mortgage

Consider refinancing your mortgage, but only if you can lock in with a shorter term or a lower interest rate. Choosing to refinance into a shorter-term loan, like switching from a 20-year mortgage to 10-year mortgage, can help you lower your interest rate and help set you up on the path toward an early payoff. Do keep in mind though, that a shorter term means a higher monthly mortgage payment which might put too much strain on your budget. You’ll also encounter additional fees for choosing to refinance so you’ll want to be aware of those in advance before you make any decisions.

As a general rule of thumb, you can expect to pay 2% – 5% of the loan principal amount in closing costs when you opt to refinance your mortgage. These costs include but are not limited to:

  • Appraisal fee of $300+
  • Title Insurance $250+
  • Attorney fees of $500 – $1,000 + disbursements

It’s always wise to do your homework in advance so you’re well aware of any fees you’ll encounter as a result of your financial decisions. This will also give you an opportunity to compare your options to renew or refinance your mortgage when the time comes.

Making Lump-Sum Payments

Having a mortgage that allows you to make extra payments as desired can help you pay your mortgage off a lot faster. While it’s always wise to check with your lender first, most mortgage terms allow borrowers to make annual prepayments of 10% – 20% of the principal, without incurring any extra fees. If you can, try to avoid choosing a mortgage that only allows you to make extra lump sum payments on the mortgage anniversary as being limited to a specific day each year might not align with your cashflow schedule.

Renewing Your Mortgage At A Lower Rate

While sticking with your current financial institution or bank is convenient, it’s important to shop around for a lower mortgage rate and consider all of your options. Compare apples to apples when looking at loan programs and don’t forget to check out your options with a credit union or mono-lender who uses mortgage brokers and deals exclusively in mortgage loans.

Making Weekly Or Biweekly Payments

Opting for biweekly mortgage payments essentially splits your monthly mortgage payment in half and by doing this, you’ll end up making the equivalent of 13 months of payments in one year, instead of the typical 12. This may not seem like a big difference, but it can save you money in interest! This tends to be a smart plan for most homeowners as the extra payment is barely noticeable so it’s a small change that can have a big impact in the long run. Just be sure to speak to your lender about getting that set up.

Bonus Tip: Avoid Prepayment Penalties

In most cases you can pay off your mortgage early without worrying about any additional fees or penalties, but there are a few things you’ll want to keep in mind.

Connect with your lender to learn more about their prepayment policy to see if any fees will be encountered should you try and prepay. You’ll also want to make sure there are no restrictions in regard to how and when you can make your additional mortgage payments as some loans may have terms that require you to follow a specific schedule. As we’ve mentioned previously, it’s also very important to ensure your extra payments are put toward the principal and not the interest.


While there are many different approaches to paying off your mortgage faster, the right answer won’t be the same for everyone. We all have different needs, goals and financial situations, so it’s important that you choose what suits you best when it comes to short and long-term financial plans. If you want to learn more about the mortgage process or need advice from a professional, reach out to our team at Rocket Mortgage.