Mortgage Payoff Calculator

What is a Mortgage Prepayment?

A mortgage prepayment is any payment you make on top of your regular mortgage payment. This extra money goes directly toward reducing your principal balance, which means you pay less interest over the life of your mortgage.

Pros of Making Prepayments

• Save on interest: Even small prepayments can save you tens of thousands of dollars over the life of your mortgage.
• Pay off your mortgage faster: Prepayments reduce your amortization period, helping you become mortgage-free sooner.
• Build equity faster: More of each payment goes toward your principal, increasing your home equity.
• Reduce financial risk: A lower mortgage balance means less exposure to interest rate changes at renewal.

Cons to Consider

• Reduced liquidity: Money put toward your mortgage is locked in your home equity and not easily accessible.
• Opportunity cost: You might earn higher returns investing that money elsewhere, especially in a low-interest-rate environment.
• Prepayment penalties: Some mortgage agreements limit how much you can prepay without penalty. Check your mortgage terms.
• Better uses for the money: Paying off higher-interest debt (credit cards, personal loans) should generally come first.

How Payment Frequency Affects Your Mortgage

Choosing an accelerated payment frequency is one of the simplest ways to reduce your mortgage faster. With accelerated bi-weekly payments, you effectively make one extra monthly payment per year. This can shave years off your amortization and save thousands in interest — all without changing your budget significantly.