Mortgage prepayment privileges in Canada: the limits and what to compare

What FCAC says about prepayment privileges

Prepayment privileges are the extra payments your contract allows without a charge. FCAC says you may only be able to increase your payments by a certain amount each year, and put a limited amount toward the mortgage as a lump sum. If you pay above the maximum, a prepayment penalty applies, the same charge you would face for breaking the mortgage early (see prepayment penalties).

There is no single legal limit on prepayment privileges; each lender sets its own in the contract.

What a federally regulated lender must tell you about prepayment privileges

The FCAC "Code of Conduct for Federally Regulated Financial Institutions — Mortgage Prepayment Information" (page dated September 24, 2025) applies to federally regulated lenders on mortgages where a prepayment charge could apply.

Under the Code of Conduct, a federally regulated lender gives you information every year on your prepayment privileges and the yearly amount you can prepay without a charge. The lender also provides prepayment calculators and a toll-free line to knowledgeable staff. The Code does not cover business-purpose mortgages or borrowers who are not individuals.

When prepayment privileges matter, and what to ask each lender

When you compare a renewal letter with another offer, each offer's prepayment privileges sit alongside its rate. Prepayment privileges matter most if you expect a bonus, an inheritance or the sale of another property, or want to pay the mortgage down faster.

Questions worth asking each lender, in writing:

• Lump sum: how much can you pay down each year without a charge, and is there a minimum amount per payment?
• Payment increase: how much can you raise your regular payment each year, and can you lower it again later?
• Reset date: does the allowance reset on the calendar year or on your mortgage anniversary?
• Carry-over: if you do not use this year's room, does any of it carry into next year, or is it lost?

Prepayment limits vary by lender and product, so we do not quote typical figures. Ask each lender, and compare the answers side by side.

What the prepayment-privilege rules do not cover

• Paying the whole mortgage off early. Privileges cover partial prepayments. Paying off the full balance before the term ends is generally a prepayment and a penalty can apply.
• Maturity. At the end of your term you can pay down any amount, switch or renew without a prepayment penalty.
• Credit unions. The Code applies to federally regulated lenders. If your mortgage is with an Ontario credit union, ask it how its privileges work and what it tells you each year.

Sources

• Financial Consumer Agency of Canada — Paying off your mortgage faster, page dated 2025-10-15, checked 2026-10-26.
• Financial Consumer Agency of Canada — Code of Conduct for Federally Regulated Financial Institutions — Mortgage Prepayment Information, page dated 2025-09-24, checked 2026-10-26.

What to do next

Enter both offers, privileges included, in the offer check to see what to ask about. Or start at Can your bank do better and we'll compare the full terms, not only the rate.