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Pre-payment options can vary greatly between mortgage lenders.  However, this important feature can allow you to pay off your mortgage faster, and potentially save YOU thousands of dollars in interest.

Here is a brief summary of the two types of pre-payment options you SHOULD see in your mortgage:


Most lenders allow you to increase your payment amount by 10%-20% every year. If for example your payment is initially $1000 per month, you can increase it to between $1100-$1200. Keep in mind, once you’ve made this increase most banks won’t let you go back to your original $1000 payment. So be sure that you can afford this increase moving forward.

This is a great way to save A LOT of money without shocking your monthly budget.  By increasing your mortgage by only $100/month on an annual basis (4 times during a 5 year term) you will pay an extra $14,400 directly off the principal of your mortgage.


Many lenders will allow you to make lump sum payments of between 10%-20% on your outstanding mortgage balance. Some banks only let you make this payment once a year on your anniversary date, while others (the good ones) allow you to make these extra payments whenever you wish throughout the mortgage term.

For example: If you have a $400,000 mortgage balance you can make lump sum payments (usually min of $100) throughout the year of up to $80,000 (20%) over and above your regular mortgage payment.

This is a great tool for self-employed, commissioned and seasonal workers, or anyone receiving lump sums of money that want to pay down their mortgage aggressively and penalty free.

WARNING: Many banks offer customers rate specials but restrict them by not allowing these pre-payment options. The BMO special that was in the news recently was a great example of this. While the 2.99% rate was attractive, they really LOCK you in. Always be aware of these restrictions when choosing your bank, and ask your trusted mortgage professional (me) for clarification.

I work with my clients on an ongoing basis to ensure they are taking advantage of these options. Continually strategizing to pay less interest to the banks and have you mortgage-free faster is one of the many services I provide.