In Canada, home buyers can choose from several types of mortgages, including open mortgages. Find out how open mortgages work, as well as the pros and cons.
In Canada, an open mortgage is a type of mortgage that allows you to pay back the mortgage principal, in part or in full, anytime without incurring a prepayment penalty. Open mortgages are more flexible than closed mortgages, which charge a prepayment penalty if you renegotiate or refinance your mortgage, or if you pay off what you owe before the mortgage term ends. An open mortgage may be a good option if you think you can pay off your mortgage quickly; however, in Canada, interest rates tend to be higher for open mortgages.
With an open mortgage, you may have different options to pay down your mortgage faster, depending on your lender and your mortgage agreement:
Example: “When Erdem’s mortgage came up for renewal, he chose an open mortgage because he knew he planned to sell the home soon and wanted to avoid a prepayment penalty.”
If a link has an asterisk (*) at the end of it, that means it's an affiliate link and can sometimes result in a payment to MoneySense (owned by Ratehub Inc.) which helps our website stay free to our users. It's important to note that our editorial content will never be impacted by these links. We are committed to looking at all available products in the market, and where a product ranks in our article or whether or not it's included in the first place is never driven by compensation. For more details read our MoneySense Monetization policy.
Share this article Share on Facebook Share on Twitter Share on Linkedin Share on Reddit Share on Email
When collecting disability, retiring early is an option. But find out how that can impact disability income and retirement...
Created By
Canadian Financial Summit
There’s a reason you’re reacting to an email in your inbox. It’s meant to make you feel like you...
With the average rent in Canada rising more than 9% this year, does it make sense to take out...
Canadian citizens who work in the U.S. have to meet Canadian and U.S. tax filing requirements. Here’s what to...
Mortgage protection can be a good idea, if for instance you have a condition or illness that might make...
A guide to critical illness insurance—why many Canadians are looking into this kind of insurance policy. Find out what...
Critical illness insurance isn’t the same as disability insurance. Here’s what else to keep in mind when deciding how...
Disability insurance can be a life saver if you’re seriously ill or injured. Here’s how it works.
