Prepayment

Tip
01

Choose accelerated weekly or biweekly payments to pay off your mortgage quickly. For example, if you want to make an accelerated weekly payment, we would take your normal monthly payment and divide it by four. That means you would make 52 payments by the end of a year, which is equal to one extra month’s payment, applied directly to your loan’s principal. This can take years off your mortgage and save you thousands!

Tip
02

Prepay up to 20% of your original mortgage amount annually and your payment (principal and interest) can be increased up to 20% once per calendar year.

By paying a little extra biweekly you could save thousands and take years off your mortgage.

To calculate how much you could save by increasing your payments, try out our mortgage calculator. Just select the Payment tab and remember to add prepayment information.

For more personalized mortgage advice, we recommend popping into a branch or talking to one of our mobile mortgage specialists.

Don't forget the prepayment penalties

You can pay off your mortgage more quickly, but there are some prepayment penalties. These penalties will come into play if you prepay more than the allowable amount or pay off your closed mortgage before the end of the term.

You can find out more about the prepayment penalty in your mortgage agreement. It’s outlined in the prepayment clause. Here’s how it is calculated: the greater of three months’ interest or the interest rate differential.
 
For example1,2, for a residential mortgage with a current balance of $100,000 and a current interest rate of 5%, the three-month interest calculation is:

Outstanding mortgage balance x annual interest rate / 12 months x 3 months ($100,000 x 5.00%) / 12 months x 3 months = $1,250.00

Interest rate differential calculation:
Current mortgage interest rate   5%
Days remaining on term 624
Current interest rate on a 2 year term 3 3.50%

Rate difference between your current mortgage rate and today’s interest rate, for a term similar in length to what is left on your mortgage

1.50%
Multiply your mortgage balance by rate differential to get interest differential for 1 year $100,000 x 1.50% = $1,500.00
Multiply this amount by the “days remaining on your term” divided by 365 days $1,500.00 x 624 /365 = $2,564.38
Total interest rate differential is $2,564.38

In this example the interest rate differential is greater than three months of interest. That means the penalty charged would be $2,564.38.

Have questions? Give us a call at 1-800-667-7477, or drop by a branch for a chat.

  1. The above calculation is an example only and should not be relied upon for advice. Contact us for information to your mortgage.
  2. For all variable-rate mortgages, the prepayment penalty is three month’s interest.
  3. The comparison rate is the interest rate for the term most closely matching your remaining term. If discounted interest rate is used, the calculation of the interest rate differential will depend on the terms of the mortgage contract.
 

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