Most homeowners know their mortgage payment.
Far fewer know:
How much interest could I pay before this mortgage is gone?
That’s a much more interesting number.
Imagine you owe:
$400,000
with years remaining on your mortgage.
Your lender tells you the payment.
You make it.
Month after month.
But every mortgage payment is doing two jobs:
Interest → cost of borrowing
and
Principal → reducing what you owe
Now something interesting happens when additional money is applied to principal.
You aren’t simply paying extra this month.
You’re reducing the balance on which future interest is calculated.
That can potentially reduce both:
future interest
and
time until mortgage freedom.
FCAC notes that increasing regular mortgage payments—even by a small amount—can help pay a mortgage off faster. Lump-sum and increased-payment options depend on the mortgage contract.
But check your contract first
This is important.
A closed mortgage may limit how much extra principal you can pay without a charge. Lenders can offer prepayment privileges, but those limits and conditions vary. Paying beyond what’s permitted can trigger a prepayment penalty.
So don’t blindly send extra money.
First understand your mortgage.
Then run the numbers.
Nirvair takeaway
Don’t only ask:
“Can I afford my mortgage payment?”
Ask:
“What happens if I add $100, $300 or $500?”
The answer may be measured in years, not months.
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What would $300 extra do to your mortgage?
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