Lump-Sum Payment

Quick Definition

An extra one-time payment applied directly to principal.

Full Explanation

A lump-sum payment is an extra payment on top of your regular schedule, applied directly to principal. Most closed Canadian mortgages allow lump sums of 10%–20% of the original balance each year without penalty.

Related Terms

Prepayment Privilege

The right to make extra mortgage payments without penalty, typically 10–20% of original amount annually.

Principal

The original loan amount borrowed, before interest is applied.

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