What are the differences between an open and closed mortgage?

 

An open mortgage is a mortgage which can be prepaid at any time, without requiring the payment of prepayment charges. A closed mortgage can't be prepaid, renegotiated or refinanced before maturity unless the terms and conditions of the closed mortgage are satisfied first, including the payment of a prepayment charge. Generally, banks charge a higher interest rate for open mortgages.

 

With a closed mortgage, you’re normally given a prepayment privilege amount. This is a set limit to how much you can pay beyond your regular mortgage payments without a prepayment charge. Paying more than this amount will normally result in a prepayment charge. Tangerine only offers closed mortgages.

 

Here's an article you might find helpful. It deals with the difference between fixed and variable mortgage rates and open versus closed mortgages: Fixed vs Variable Mortgage Rates