How to Pay Off Your Mortgage Faster

Paying off your mortgage faster isn’t just about financial bragging rights. It can mean serious savings in interest and more freedom to use your money the way you want. In this guide, we’ll break down all the practical ways to shorten your mortgage term in Canada, from payment frequency hacks to what you should be doing at renewal.

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Why Is It Worth Paying Off Your Mortgage Faster?

Getting rid of your mortgage early frees up your biggest monthly expense and gives you more financial flexibility. No more mortgage means more cash for retirement savings, your kids’ education, or that big travel bucket list. It also builds home equity faster, which you can later tap into if needed. And let’s not forget: it reduces the total interest you pay over time, often by tens of thousands of dollars.

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Payment Frequency: Your Secret Weapon

Many Canadians default to monthly payments, but that might not be the smartest move. Lenders typically offer:

• Monthly (12/year)
• Semi-Monthly (24/year)
• Bi-Weekly (26/year)
• Accelerated Bi-Weekly (26/year)
• Weekly (52/year)
• Accelerated Weekly (52/year)

Why accelerated matters: Accelerated payments mean you’re squeezing in an extra monthly payment every year. That might not sound like much, but over 25 years, it can shave off nearly 4 years and save you upwards of $75,000 in interest on a $500,000 mortgage.

4 Ways to Pay Off Your Mortgage Faster

1. Switch to Accelerated Payments

Just moving from monthly to accelerated bi-weekly or weekly payments can make a big difference. You’ll barely feel the extra payment spread across the year, but it adds up fast.

2. Make Lump Sum Payments

Got a bonus at work, tax refund, or a small inheritance? Use it to chip away at your principal. Even one lump sum a year within your prepayment privileges can fast-track your journey to mortgage freedom.
Tip: Check your mortgage agreement to see how much you can prepay annually without penalty. Most lenders allow 10% to 20% of the original balance.

3. Increase Your Regular Payment Amount

Even bumping your regular payments by as little as $50 can save you thousands in interest. More of your money goes to principal, which brings down your balance faster.

4. Round Up Your Payments

If your monthly payment is $1,173, consider rounding up to $1,200 or $1,250. The difference is small month to month but huge over time.

What to Do at Renewal

When your mortgage comes up for renewal, you have a golden opportunity to speed things up.

Shop for a Better Rate

Lowering your rate can mean paying off more principal with the same monthly payment. Use the renewal period to shop around and get the best deal.

Shorten Your Amortization

If your budget allows, consider reducing your amortization from, say, 20 years to 15. Yes, your payments go up, but the interest savings and faster payoff are worth it.

Frequently Asked Questions

How fast do most Canadians pay off their mortgages?
Most follow the standard 25-year amortization, but many aim to pay it off in 20 years or less using strategies like accelerated payments and lump sums.
Is there a penalty for paying off your mortgage early?
Depends on your mortgage. Closed mortgages often come with prepayment limits and penalties. Open mortgages let you pay off any amount anytime but usually have higher rates.
Does early mortgage payoff hurt your credit score?
Nope. Paying off your mortgage early shows lenders you manage debt well.
What are prepayment privileges?
They let you make extra payments or increase regular ones without a penalty. It’s how you supercharge your payoff without triggering fees.

With affordability continuing to erode across the country, you might want to read more on affordability & income requirements to understand what’s driving the increase in monthly housing costs.

Final Thoughts

Becoming mortgage-free earlier than planned isn’t just a dream—it’s totally doable. Whether you choose to switch to accelerated payments, toss in lump sums, round up your payments, or renegotiate better terms at renewal, every little bit helps.
Want expert guidance tailored to your mortgage? Talk to a nesto advisor today to see how fast you could own your home outright.