Open Mortgage
An open mortgage is a mortgage that can be paid off in full at any time without a penalty. This can be useful when a borrower expects to sell the property soon or wants the ability to refinance quickly.
Because the lender takes on more uncertainty, open mortgages typically have higher interest rates than closed mortgages. Borrowers should compare the cost of the higher rate against the value of flexibility.
Why this matters:
Flexibility is valuable when your timeline is uncertain. Understanding open mortgages helps borrowers avoid paying large penalties when plans change, while still keeping costs in check.
Related Mortgage Terms
Often confused with:
Closed Mortgage — Closed mortgages restrict early payout and often have penalties.
Closely related:
Mortgage Term — Flexibility matters most during the term.
Refinancing — Open mortgages can simplify refinancing timing.
Next step:
Closed Mortgage — Compare the rate savings against potential penalty risk.