RBC Mortgage Prepayment Privileges (2025): Lump-Sum, Double-Up & Limits

For most Canadians, a mortgage is the largest debt they’ll ever carry. The faster you can pay it down, the more interest you’ll save—and the more financial freedom you’ll gain.

One of the best tools to achieve this is through prepayment privileges. Major banks like RBC (Royal Bank of Canada) allow borrowers to make extra payments without penalty.

But there are rules: limits on how much you can pay, how often, and in what forms. This guide breaks down RBC’s mortgage prepayment privileges for 2025, including lump-sum payments, double-up payments, and annual limits.

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What Are Mortgage Prepayment Privileges?

Prepayment privileges are built-in options in your mortgage contract that let you pay extra toward your mortgage principal without triggering prepayment penalties.

These extras reduce your balance faster, shorten your amortization period, and save thousands in interest. RBC, like other big banks, sets specific guidelines around these privileges.

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RBC Lump-Sum Prepayment Option

The most popular prepayment method is the lump-sum payment.

• Limit: Up to 10% of your original mortgage amount per year (some RBC products may allow up to 15%).
• Frequency: Can be made once per year or multiple times, as long as the total does not exceed the annual limit.
• Application: 100% of the lump-sum goes directly to reducing the principal—not interest.

Example:
If your original mortgage was $400,000, you can prepay up to $40,000 per year. Paying this extra could shorten your mortgage by several years and save tens of thousands in interest.

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RBC Double-Up Payment Option

Another powerful tool is RBC’s Double-Up® option.

• You can double your regular payment (principal + interest) on any regular payment date.
• These extra amounts go directly toward your mortgage principal.
• You can do this occasionally or as often as your budget allows.

Example:
Your normal monthly mortgage payment is $2,000. If you double-up once to $4,000, the extra $2,000 reduces your principal. Do this consistently, and you could shave years off your amortization.

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Annual Increase of Payment Option

RBC also allows borrowers to increase their regular payment amount once per year:

• Limit: Up to 10% increase annually.
• Once increased, the higher payment remains for the rest of your term.
• This is a great way to match mortgage payments with salary raises or reduced other expenses.

Example:
If your regular payment is $1,800/month, you can increase it to $1,980/month (10% increase). That extra $180/month goes straight to principal reduction.

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Combining Prepayment Privileges

The real power comes from combining privileges.

Example Strategy:

• Use a $10,000 lump-sum payment once a year.
• Double-up two monthly payments during the year.
• Increase your ongoing payments by 10%.

This layered approach can dramatically reduce your amortization—sometimes by 5–10 years.

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What Happens If You Exceed Limits?

If you go beyond RBC’s annual limits, you may trigger a prepayment penalty.

• For fixed-rate mortgages, penalties are often calculated using the Interest Rate Differential (IRD), which can be costly.
• For variable-rate mortgages, penalties are usually 3 months’ interest.

That’s why it’s crucial to know your limits before making extra payments.

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Real-Life Scenario: Saving Thousands

Let’s compare two RBC borrowers with the same $400,000 mortgage at 5% for 25 years.

• Borrower A (No prepayments): Pays standard payments only → Interest cost ≈ $300,000 over the term.
• Borrower B (Uses privileges): Pays a $10,000 lump-sum each year + doubles one payment → Interest savings ≈ $75,000+ and pays off 6 years sooner.

This shows how using privileges strategically can transform your mortgage.

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Key Takeaways for 2025 RBC Borrowers

• Lump-Sum Payments: Up to 10% of original principal annually.
• Double-Up® Payments: Double your regular payment anytime.
• Payment Increases: Raise regular payments by up to 10% annually.
• Savings Potential: Shorten amortization by years and save tens of thousands in interest.

The flexibility of these privileges allows RBC borrowers to adapt payments as finances improve—making homeownership less stressful and more efficient.

RBC’s prepayment privileges in 2025 give borrowers powerful tools to reduce mortgage debt faster. By combining lump-sum, double-up, and annual increases, you can take control of your financial future.

Whether you’re earning a bonus, getting a raise, or simply budgeting smarter, even small prepayments add up over time. The key is knowing your limits—and using them wisely.

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