Canada Mortgage payoff calculator

How early mortgage payoff is calculated

The calculator simulates your loan month by month: each month interest accrues on the remaining balance, your payment (plus any extra) is applied, and the balance falls. With an extra payment, the balance falls faster — so the next month's interest is smaller, so even more of the payment hits principal. That feedback loop is why modest extra payments compound into years saved.

Worked example

$250,000 remaining at 6.5% with a $1,900/month payment clears in about 23 years with roughly $267,000 of interest. Add $200/month and it clears in about 18½ years with roughly $205,000 of interest — 4½ years sooner and about $62,000 saved. (Figures vary with your exact inputs.)

Payoff vs investing the difference

Extra principal earns a guaranteed, tax-free return equal to your mortgage rate. A diversified portfolio has historically earned more — with volatility. A pragmatic order of operations most planners agree on: employer pension match first, high-interest debt second, then split between mortgage and investments according to your rate and sleep-at-night preference. At a 6.5% mortgage rate the guaranteed return is genuinely competitive; at 2%, investing usually wins on the math.

Before you start overpaying

• Confirm there's no early-repayment charge or annual overpayment cap on your product.
• Keep your emergency fund intact — money in the house is hard to get back out.
• Tell the lender extra payments are for principal reduction, not advance instalments.
• Recasting or refinancing may suit you better if cash flow, not total interest, is the problem — compare with the refinance calculator.