Open Mortgage
Quick Summary
A mortgage you can pay off early with little or no penalty.
ELI5 Explanation
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You can exit anytime, but the rate is usually higher.
Detailed Explanation
Open mortgages offer maximum flexibility for borrowers who might sell or refinance soon. Because the lender takes more prepayment risk, open mortgage rates are typically higher than closed products, so they’re often used for short periods.
Example
A homeowner choosing an open mortgage for three months while waiting to sell their current property.
Why It Matters
If you may need to pay out early, flexibility can cost less than penalties on a closed mortgage.