Tips to help you pay off your mortgage faster

Tips to help you pay off your mortgage faster

Looking for ways to pay off your mortgage faster? That’s great — even small steps over time can make a big impact on helping you be mortgage free faster.

There are two parts to each mortgage payment — the principal and the interest. The principal is the remaining balance of what you originally borrowed, while the interest rate is what you’re charged while that principal is outstanding. You may be looking to pay as much as you can toward the principal to reduce the amount of interest you’ll pay over the life of your mortgage.

We’ll walk you through what you need to know to start paying off your mortgage faster.

During your mortgage term, you’ll have opportunities to make changes that will help you pay off your mortgage faster. There are some changes you can make at any point during your term, while others you can make when you renew your mortgage.

Keep in mind, it’s important to understand the terms of your mortgage agreement before making any changes to your payments. Your mortgage may come with certain prepayment privileges. At TD, we make it easier to pay off your mortgage faster with flexible mortgage payment features.

Take advantage of TD flexible payment options at any time during your term.

Speed up your payments.

What it is: If you’re currently making monthly mortgage payments, you might be able to switch to a more accelerated payment schedule. For instance, you can pay monthly, semi-monthly, biweekly or weekly, which over time, may make your mortgage disappear faster and potentially save you thousands of dollars in interest over the life of your mortgage.

Try our handy calculator to see how much your interest payments would be on a more frequent payment schedule and how much you can save over your amortization period.

How to do it: You can make this change at any time by talking to a Mortgage Specialist by phone or by making an appointment at a branch.

Make a lump sum payment.

What it is: Say you run into some extra cash, like a tax refund, an inheritance, or a bonus at work, and you want to put it toward your mortgage. There are a few things you’ll need to know about making lump sum payments.

A lump sum payment is a one-time payment you make toward your mortgage, outside your regular payments. At TD, with a closed mortgage, you can pay up to 15% of your original amount borrowed per year without paying a prepayment charge. For example, if your original mortgage principal amount was $400,000, then you can make a lump sum payment of up to $60,000 every year.

Tip: You can pay the 15% lump sum payment all at once — or over time during the calendar year. Chat with a Mortgage Specialist for more details.

With a TD mortgage that's open to prepayment, you can make as many lump sum payments as you like each year (without prepayment charges) to help shrink your principal and pay off your mortgage faster.

How to do it: You can make lump sum payments by logging into EasyWeb Online Banking or by visiting a branch.

Increase your regular payment amount.

What it is: You currently pay a set amount toward your mortgage on a regular schedule — but what if you bumped up the amount of those payments? Even a small change can go a long way toward paying off your principal faster.

With TD, you can increase your payment as often as you like, as long as the total of all increases doesn't exceed 100% of your original principal and interest payment. That’s double your normal payment amount. So, for example, if your original mortgage agreement has you paying $1,000 a month, you could pay up to $2,000 per month during your mortgage term.

For example, if you get a raise at work, you can set aside some of the increase in your pay cheque to go toward your mortgage.

How to do it: You can increase your mortgage payments by logging into EasyWeb Online Banking or by speaking to a TD Mortgage Specialist.


How to pay off your mortgage faster when you renew:

If you’re close (within 120 days) to your mortgage maturity date (aka the end of your term), you can renew your mortgage without paying an early renewal charge. That means the final months of your mortgage term are a good time to think about making changes to pay off your principal faster. Here are some ideas:

Take advantage of lower interest rates:

If you renew into a lower interest rate, instead of paying less each month, consider keeping your regular payments the same as before you renewed. This is similar to increasing your payment amount. You’ll be putting more toward your principal each month and chipping away at your mortgage balance faster.

Shorten your amortization period:

You can also use the time to renew as an opportunity to shorten your amortization period without paying a prepayment charge. Remember, your amortization period is the time it takes to pay off your mortgage completely at the same interest rates and payment. The shorter the amortization, the quicker you’ll pay off your mortgage.

Keep in mind, a shorter amortization often means a higher regular payment amount. For instance, if your mortgage is $500,000 and your interest rate is 2.14%, your payment would change based on your amortization length:


Amortization period
Monthly payment amount
25 years
$2,151.71
20 years
$2,560.44
15 years
$3,247.68

As you can see, as the amortization period goes down, the monthly payment amount goes up. If you’re interested in changing your mortgage amortization, chat with a TD Mortgage Specialist. Book an appointment at a branch to get started.

At TD, we’re all about giving you the options you need to pay off your mortgage faster. A Mortgage Specialist can walk you through how you can take advantage of our flexible mortgage payment features and help you find ways to achieve your financial goals.



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