Buying a home: “Open” and “closed” mortgages
When you take out a mortgage you will need to negotiate “terms.” The term sets the interest rate and payments you have to make for that period of time (e.g. 6 months, 1 year, 3 years, 5 years, etc.).An “open” mortgage means that, during the term, you can pay off any part of your loan at any time.A “closed” mortgage means you must pay back the amount you agreed to, for the time you agreed to, when you selected the “term.” When the term ends, you can pay off as much as you like and decide on a new term.