How to pay off your mortgage faster

Pay off your home quicker with mortgages that have prepayment privileges. Lenders offer open, closed and convertible mortgages Opens a popup.. Open mortgages usually have higher interest rates than closed mortgages, but they're more flexible because you can prepay open mortgages, in part or in full, without a prepayment charge. Closed and convertible mortgages often let you make a 10% to 20% prepayment. Your loan agreement explains when you can make a prepayment, so get the details from your lender beforehand. Also, decide which privileges you want before finalizing your mortgage.

The amortization period is the length of time it takes to pay off a mortgage, including interest. The shorter the amortization period, the less interest you pay over the life of the mortgage. You can reduce your amortization period by increasing your regular payment amount. Your monthly payments are slightly higher, but you'll be mortgage-free sooner. Find out how much you could save by shortening your amortization period with our mortgage payment calculator.

When it's time to renew your mortgage, pay as much as possible. All CIBC mortgages are open at renewal, so you can pay as much as you want on your mortgage at this time.

If you switch to an accelerated weekly payment schedule, you'll increase your mortgage payments from 12 to 52 payments annually — a payment every week instead of monthly, and one extra monthly payment every year.

If you switch to an accelerated biweekly payment schedule, you’ll increase your mortgage payments from 12 to 26 annually — a payment every 2 weeks instead of monthly, and one extra monthly payment every year.

Increase the size of your regular mortgage payment to take a large chunk off your mortgage principal. Choose a higher payment amount when you arrange your mortgage, or at any time during the term. This lets you pay down the principal faster.

Example: If you increase your monthly mortgage payment amount by $170 from $830 to $1,000, you'll save almost $48,000 in interest over the amortization period. And you'll own your home about 8 years sooner.¹

In addition to your regular mortgage payment, use your prepayment privilege to make a lump-sum payment. It's applied directly to your outstanding principal if you don't owe any interest. Ask your lender how much you can prepay every year. Paying lump sums every year saves you money over the course of your mortgage². If you pay more than the amount of your annual prepayment privilege, you may have to pay a prepayment chargeOpens a popup. on the excess.

Take advantage of extra cash, such as your tax refund or work bonuses. Also, increase your payment amount if your income increases. Make several prepayments early in your mortgage. The more prepayments you make, the less interest you'll pay over the entire mortgage term.

Investing is one way to raise money for a lump-sum payment. For example, you can invest your money in a tax-free savings account (TFSA). Then pay a lump sum once your investment grows. Compare rates on your potential investment and your mortgage. If investing offers a higher rate of return than your mortgage, put your money in an investment and watch it grow. If not, put a lump sum on your mortgage instead.

Learn about CIBC tax-free savings accounts.