There are two basic types of mortgage categories available to borrowers in Ontario–open and closed mortgages. Open mortgages are better for people who need flexibility in their mortgage products. Those who plan on selling and moving, refinancing, or otherwise changing their loan terms will require an open mortgage. An open mortgage has no penalties for early payoffs, lump-sum payments, or other types of changes. A closed mortgage does charge penalties and often doesn’t allow for a premature payoff.

Are Open Mortgage Rates For Everyone?

Like any financial product, an open mortgage isn’t right for everyone. Borrowers who have a fairly stable future in terms of their housing may be better off taking a closed mortgage than an open one. The added flexibility of an open mortgage comes at a premium and borrowers must pay a higher interest rate to make up for the added convenience and lack of penalties.

In general, if there’s a chance of your housing or financial situation changing in the near future, an open mortgage is the best bet. If your employment seems stable and you don’t foresee attempting a move in the near future, a closed mortgage may be a better choice. Taking advantage of the lower rates is only more fiscally prudent if you don’t anticipate any of the types of life changes that would necessitate the penalties associated with closed mortgages.



While an open mortgage may seem like the safest option, there are a couple things you should look out for. First, you’ll want to examine the interest rate you’re given by your bank. If you have the time, shop around a bit and see what other lenders are offering. Open mortgages cost more in interest than closed mortgages, and you’ll do better by shopping around for the best rate.

Another thing to keep an eye out for is hidden fees. While you won’t have as many penalties with an open mortgage as you would with a closed mortgage, there could still be some hidden fees and charges. For example, you may not have a large prepayment penalty with an open mortgage, but there may be special filing or administrative fees that you need to be aware of.

If you’re interested in learning more about open mortgages and what types of rates are available, click the link below and you’ll be put in touch with a qualified mortgage lender. You may be surprised to find that you can get an open mortgage with more freedom than your current closed mortgage for just a little bit more each month.