There are a few easy ways to make extra principal payments in Canada that can save you thousands in interest and help you pay off your mortgage years sooner. Here are some simple strategies Canadian homeowners can use:

1. Round Up Your Monthly Payment

Rounding up your monthly mortgage payment is a small change that can make a big difference.

For example, if your regular monthly payment is $1,734 and you round it up to $1,800, you'll be paying an extra $66 toward the principal each month. Over time, this can reduce your interest costs significantly and shorten your amortization period by several years.

2. Use Your Income Tax Refund for a Lump Sum Payment

Most Canadian mortgages allow you to make annual lump sum payments without penalty—often up to 15% or more of the original principal.

So if you get a $1,000 tax refund, apply it directly to your mortgage. For a $400,000 mortgage at 5.5% interest, that one-time payment could save you over $2,000 in interest and shorten your term by several months.

3. Opt for a Shorter Amortization Period

While 25- or 30-year amortizations are common in Canada, choosing a 15- or 20-year mortgage (if you can afford the higher payments) means huge savings.

For example, on a $400,000 mortgage at 5.5%, a 15-year term could save you over $130,000 in interest compared to a 30-year amortization. Yes, your monthly payments will be higher—but the long-term savings are worth it.