Mortgages: How to save money on your mortgage

Ways to save money on your mortgage

1. Review interest rate options

The two interest rates you can choose from are a fixed rate and a variable rate (also called a variable rate mortgage/ARM), and these are based on your risk appetite.

A variable rate may be lower than a fixed rate, but your payments will increase when they increase. If you have a limited budget, this can lead to financial stress when costs become unaffordable. If you are not afraid of risk, then a variable rate mortgage can be a way to potentially save money. The advantage is that if interest rates go down, you pay less for your mortgage. That’s a risk you’ll take.

If you choose a fixed rate, you’ll have the peace of mind of knowing that your payments will remain the same for the life of your mortgage. When interest rates rise, you can be sure that your rates will stay the same.

2. Switch to accelerated payments

Moving from 12 monthly payments to payments every 2 weeks isn’t always enough. According to the Financial Consumer Agency of Canada (FCAC), a standard biweekly payment is calculated so that you pay the same yearly total as with monthly payments. The accelerated option is the one that cuts your interest. As of October 2026, the FCAC describes the calculations this way:

• Biweekly: monthly payment × 12 ÷ 26, the same yearly total as 12 monthly payments
• Accelerated biweekly: monthly payment ÷ 2, paid 26 times a year
• Accelerated weekly: monthly payment ÷ 4, paid 52 times a year

With an accelerated schedule, you pay the equivalent of one extra monthly payment each year, and that extra amount goes straight to your principal. According to the FCAC, this may save you thousands, or tens of thousands, of dollars in interest over the life of your mortgage.

Talk to your lender first to make sure there are no penalties, as this would defeat the purpose of the change. The benefits of switching must outweigh the costs for you to save money in the long run.

3. Make additional lump sum payments

If bi-weekly payments are not viable for you, consider making additional lump sum payments on your mortgage. Whether you use your vacation bonus or the money you were given on your birthday, these extra payments on your principal balance will reduce the length of your loan and the interest you pay.

First, talk to your lender to make sure there are no penalties to pay, and if you get the green light, consider making additional lump sum payments as often as possible. Even if it’s only another $50, it adds up over time.

4. Negotiate rates with your bank

If you’re buying a home, don’t settle for the first offer you receive. Shop around and tell lenders that you are looking for the lowest interest rate, and your bank may negotiate a lower rate with you.

Your bank will consider lower rates if you have more than one product or service with them, an unsecured loan, multiple bank accounts, etc. The more products you have with them, the more valuable a customer you will be.

Your bank must feel that it does not want to lose you as a customer.

5. Round up your payments

If your mortgage payment is $564 per month, consider rounding up to $600 and doing so for the remainder of the mortgage term. The extra money you pay will benefit you in the long run, as you will reduce the length of your loan and pay less interest.

This option is an easy way to save money on your mortgage over a long period of time, and it won’t affect your finances at all if you can afford the extra $40 to $50 per month.

Many mortgages allow you to increase your payments by up to 20%, with the difference going directly to the principal amount.

6. Limit penalties

Financial institutions will usually allow you to repay a portion of the amount borrowed without any penalty. Consider paying the authorized amount without penalty before breaking your mortgage, which would result in the payment of the corresponding penalty.

7. Refinancing with cash withdrawal

If you’re struggling to make ends meet and can’t pay your mortgage on time, consider accessing the equity in your home using a cash-out refinance option. This option will give you access to a large sum of money that can be used to pay off your credit card debt and any other remaining debt. In return, you can reduce your monthly payments on other debts.

A cash-out refinance will increase your monthly mortgage payment, or lengthen the amortization, or perhaps a combination of both.

Make sure you are aware of the risks involved, as you could potentially incur additional consumer debt over time, which you want to avoid. The benefits, however, will be the reduction of your high-interest debt and lower monthly expenses.

8. Choose a shorter amortization

The amortization period is the length of time it takes to pay off your mortgage in full. A longer amortization lowers your payments, but the Financial Consumer Agency of Canada (FCAC) points out that the longer the amortization, the more interest you pay. If your budget allows it, ask your lender to compare the total interest cost over two amortization periods, both when you sign and at renewal.

Bottom Line

There are many other options you can consider to help you save money on your mortgage. These include using a mortgage broker to negotiate lower rates with lenders, saving a larger down payment before getting a mortgage, and avoiding paying mortgage insurance twice.

Do your research and find a solution, or even several solutions, to help you save money. Don’t settle for the first low interest rate, but instead continue to negotiate with your lender to revise your mortgage terms and start saving today!

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