Your CCB and GST Credit Just Hit. Here's How to Use Them on Your Mortgage (Without Wasting the Window).
The Canada Child Benefit and the quarterly GST/HST credit landed in Canadian bank accounts this week. For most Canadian households, that's somewhere between $500 and $2,000 — and almost every piece of advice you'll see today is about how to spend it or save it.
There's a third option that's almost never talked about, and the numbers are real.
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**The structural feature most people forget exists**
Every federally regulated mortgage in Canada comes with an annual prepayment privilege — typically 15% of the original principal balance per year, on top of regular payments, without penalty.
Prepayments go directly to principal. The next interest charge is calculated on a smaller balance. Your monthly payment doesn't change. The mortgage just ends sooner — and you pay dramatically less interest in total.
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**The actual numbers on a $400,000 mortgage at 4.04% (current 5-year fixed) over 25 years:**
▪ $1,500 prepayment, applied once → ~$800 saved, ~2 months off
▪ $1,500 prepayment, applied twice a year → ~$4,800 saved, ~8 months off
▪ $2,000 prepayment, applied four times a year → ~$9,500 saved, ~16 months off
▪ $300/month continuous prepayments from a parent's CCB-only entitlement, applied automatically → ~$18,000 saved, ~2.5 years off
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**The three mistakes we see most often:**
1. Putting the money in a HISA at 3.5% (taxable) instead of the mortgage at 4.04% (tax-free). The mortgage wins per dollar.
2. Spending the payment on something that depreciates. A $1,500 prepay compounds for 20 years. A $1,500 purchase depreciates.
3. Missing that the prepayment privilege resets on your **mortgage anniversary date**, not the calendar year. If your mortgage started in March, your 15% room resets in March.
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**When NOT to prepay:**
▪ High-interest debt (credit card at 19.99%, line of credit at 9%+). Pay that down first.
▪ Emergency fund under three months of expenses.
▪ Mortgage up for renewal in the next 12 months — check end-of-term restrictions.
▪ Variable-rate mortgage with payment shock concerns. Stabilize cash flow first.
▪ Defined goal for the money in under two years.
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**A five-minute checklist:**
1. Pull your current mortgage statement. Note the balance, remaining amortization, and mortgage anniversary date.
2. Find your prepayment clause. Look for "prepayment privilege," "annual prepayment limit," and "double-up payment."
3. Calculate your unused prepayment room. Original principal × 15% minus what you've already prepaid this year.
4. Decide your cadence. Monthly small prepayments beat a single annual lump-sum because of compounding inside the same year.
5. Check your HISA balance. If you have more than three months of expenses sitting in a non-registered savings account, the mortgage prepay is almost certainly the better return per dollar — even before tax.
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The Canada Child Benefit and the GST/HST credit are designed to help Canadian households with the cost of living. How you use them is your call.
For most Canadian households with a mortgage and some unused prepayment room, the math favours the prepayment. For households in any of the situations above, it doesn't.
Either way, the worst option is the one where the money sits in chequing and disappears into the rhythm of the month without a decision being made.
#CanadianMortgage #CCB #GSTCredit #MortgageTips #PragmaticMortgage #PersonalFinance
Read full article: https://pragmatic.mortgage/news/your-ccb-and-gst-credit-just-hit-here-s-how-to-use-them-on-your-mortgage-without-wasting-the-win
