What’s the difference between an open mortgage and a closed mortgage?


Open Mortgages – you can contribute more to your mortgage payments without any penalties. Open mortgages usually have higher interest rates than closed mortgages. But open mortgages are also flexible. If rates start to increase, you can easily switch to a closed mortgage.

Closed Mortgages – before the mortgage term ends, you’ll pay a prepayment charge. For example, for a fixed-rate closed mortgage, the charge is usually the greater of 3 months’ interest or the interest rate differential (IRD). For a variable-rate closed mortgage, the charge is usually 3 months’ interest. Closed mortgages usually have better interest rates than open mortgages.