January 21, 20263 min read
If you are planning a purchase, understanding this topic before you submit an application can prevent surprises. An open mortgage prioritizes repayment flexibility, while a closed mortgage usually offers a lower rate in exchange for restrictions on paying out the loan early.
Key points to understand
Here is what matters most:
- Open mortgages generally allow full repayment without a prepayment penalty, subject to the contract.
- Closed mortgages normally limit extra principal payments to stated prepayment privileges.
- Open products can be useful for short holding periods, expected property sales or temporary financing situations.
- Most long-term owner-occupied borrowers choose closed mortgages because of lower pricing, but flexibility still varies widely within that category.
Choose based on how long you realistically expect to keep the mortgage, not on the product label alone.
Want this applied to your own numbers?
Call Phil Cragg at 866-349-4915 or request a written comparison.
Request a rate quote