Increasing Mortgage Payments: The Double-Up Privilege

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Beyond lump-sum payments and accelerated payment frequency, Canadian borrowers have a third lever to pay off their mortgage faster: the regular payment increase privilege. Most lenders allow borrowers to increase their regular payment amount by 10% to 20% of the original amount, without penalty and without being required to maintain that level permanently. Some lenders also offer a double-up privilege, which allows doubling one or more regular payments during the year. For example, if your monthly payment is $2,300, a double-up would allow you to pay $4,600 for a given month. The additional amount is applied directly to principal. Increasing the regular payment has a particular advantage over lump-sum payments: it is automatic and recurring. A 10% increase in the monthly payment on a $400,000 mortgage at 5% over 25 years can reduce amortization by 2 to 3 years and save approximately $30,000 to $40,000 in interest. Conditions vary by lender. In Quebec, an AMF-certified mortgage broker can compare the privileges offered by different lenders and integrate this strategy into an overall repayment plan.

Increasing Mortgage Payments: A Lever for Accelerated Repayment

Among the accelerated repayment strategies available to Canadian borrowers, increasing the regular payment is often the simplest to implement and the easiest to maintain over time. Unlike lump-sum payments that require a one-time action, a payment increase applies automatically to every installment and produces a powerful cumulative effect on the amortization period and total interest cost.

The Payment Increase Privilege

Payment increase privilege

The Double-Up Privilege

Some lenders offer a double-up privilege that allows borrowers to double one or more regular payments during the contract year. For example, if your monthly payment is $2,300, you can choose to pay $4,600 in a given month. The additional $2,300 is applied entirely to principal. This privilege is particularly useful when you receive a one-time income (bonus, commission, seasonal earnings) and wish to direct it toward your mortgage without going through the lump-sum payment process.

Financial Impact of Payment Increases

On a $400,000 mortgage at 5% amortized over 25 years, the monthly payment is approximately $2,326. A 10% increase brings this payment to $2,559, adding $233 per month applied directly to principal. Over the life of the loan, this increase saves approximately $35,000 in interest and reduces amortization by nearly 3 years. A 20% increase (payment of $2,791) can reduce amortization by more than 5 years and save close to $60,000 in interest. The effect is amplified when the increase is combined with an accelerated payment frequency.

Typical Conditions by Lender

Increase percentage: ranges from 10% to 25% of the original amount depending on the lender. Some recalculate annually, others allow cumulative increases.
Increase frequency: most lenders allow one increase per contract year. Some are more flexible and allow quarterly adjustments.
Reversibility: some lenders allow reducing the payment to the original amount at any time, while others require maintaining the increase until renewal.
Double-up: offered by select lenders only. Generally limited to a maximum number of double-ups per year (often unlimited with lenders that offer it).
Stacking with other privileges: the payment increase is independent of lump-sum prepayment. You can use both in the same year without exceeding their respective limits.

Frequently Asked Questions

What is the difference between increasing the payment and a double-up?

A payment increase is a permanent modification (until renewal) of your regular payment. For example, going from $2,300 to $2,530 per month on an ongoing basis. A double-up is a one-time action: it allows doubling a specific payment (for example, paying $4,600 instead of $2,300 for March only). Both are applied to principal, but the increase is recurring while the double-up is occasional.

By how much can I increase my regular payment?

Most lenders allow an increase of 10% to 20% of the original payment amount per contract year. Some lenders allow a cumulative increase: for example, 10% in the first year, then an additional 10% in the second year, for a total of 20% over the original amount. Check the specific conditions of your mortgage agreement.

Can I revert to my original payment if my financial situation changes?

It depends on the lender. Some allow reducing the payment back to the original amount at any time. Others require the increased payment to be maintained until the next renewal. Clarify this condition before increasing your payment, especially if your income is variable or you anticipate a change in circumstances.

Is the double-up privilege offered by all lenders?

No. The double-up is a rarer privilege than a payment increase. Some major lenders offer it (such as TD and BMO), but others do not include it in their standard contracts. If this flexibility is important to you, ensure your mortgage contract includes it before signing. Your broker can compare the options.

Is it better to increase the payment or make a lump-sum payment?

Both strategies are complementary. Payment increases are better suited for borrowers with a regular monthly cash surplus. Lump-sum payments work best for those receiving one-time inflows (bonuses, inheritances, tax refunds). To maximize the effect, combine both approaches according to your cash flow.