Start with the basics: what’s the extra for?
Before choosing where extra cash goes, it helps to be clear on what you want it to accomplish:
- Reduce risk? Paying down debt.
- Help your kids? Building RESP savings.
- Support future you? Growing RRSPs or other investments.
Most families care about all three. The question is how to split surplus money in a way that feels balanced.
What paying down the mortgage actually does
Extra payments on your mortgage offer a guaranteed return. Every dollar you put toward principal is a dollar you won’t pay interest on later.
If your mortgage rate is 4%, prepaying is effectively like earning a risk-free 4%. For many families, that certainty feels reassuring.
Interest rates and amortization also affect this decision. See Amortization vs Term for context.
If you’re unsure how mortgage payments work in the first place, start with our Mortgage Basics Guide.
What investing can do instead
Investing through RRSPs, TFSAs, or other accounts may offer higher long-term growth, but it comes with ups and downs along the way.
- Higher potential long-term returns
- More short-term volatility
- No guarantees
Comparing the two in simple terms
- If you strongly dislike debt and value certainty, lean toward mortgage prepayments.
- If you have a long time horizon and can tolerate fluctuations, lean toward investing, especially in tax-advantaged accounts.
- If you’re somewhere in between, splitting the difference can work well.
How FinForFam tools can help you decide
Seeing the numbers often brings clarity. Try plugging the same extra amount into different tools:
- Mortgage Booster — see how prepayments affect payoff time and interest.
- — explore how extra contributions could support education costs.
- RRSP Growth Starter — project how additional investing may grow over time.
A balanced default some families like
There’s no universal right answer, but some families find comfort in a simple split:
- ⅓ toward the mortgage
- ⅓ toward children’s education (RESP)
- ⅓ toward retirement investing
That mix can evolve as your mortgage shrinks, kids get older, or retirement approaches.
Want to compare the outcomes with real numbers?
Explore this with simple tools
See how the same extra monthly amount affects your mortgage and long-term savings.
Open Mortgage Booster → Open Mortgage Planner →