Roughly 50% of your interest is paid in the first 10 years of your mortgage. So if we can decrease the lifetime of the mortgage, this could provide a huge value in savings.
So lets say you want to put 25% down on a $1 million dollar purchase, here is why we would we say do 20% down instead. The math may surprise you:
The first chart in this link the is based upon a $750,000 with a 2.79% over 25 years.
The second chart below is the result based upon $800,000 with a 2.79% over 25 years with a $50,000 lump sum on payment 13
So doing some quick math here:
All being equal and the calculation taking the extra 5% actually saves you $71,558 and pays the mortgage off 2 year faster. I have accounted for the payment difference as well. Keep in mind there are additional strategies here that could benefit you. I assumed no yield on the $50,000 for one year. Even a basic GIC or something of the light would produce a small yield. Another strategy would be to use that money to put into your RSP account and generate a tax refund, then apply that amount as an extra mortgage repayment.