Open Mortgage

An open mortgage lets borrowers repay their loan anytime without penalty, offering flexibility but often at higher interest rates.

Open Mortgage

September 30, 2025


What is Open Mortgage?

An open mortgage is a mortgage product that allows the borrower to repay the loan in full or in part at any time without penalty. Open mortgages typically have higher interest rates compared to closed mortgages due to their repayment flexibility.

Why Open Mortgage Matters in Real Estate

Open mortgages matter in real estate because they provide borrowers with maximum flexibility, making them ideal for short-term financing needs or when borrowers anticipate having funds to pay off the mortgage early. However, the higher interest rates may increase overall borrowing costs if the loan is held long term.

Example of Open Mortgage in Action

A company buying an industrial site discovers historical contamination. As the new owner, they may be liable for cleanup costs under provincial environmental laws.

Key Takeaways

  • Open mortgages allow repayment at any time without penalty.
  • Offer flexibility for borrowers with short-term needs.
  • Typically have higher interest rates than closed mortgages.
  • Useful when anticipating lump-sum payments (e.g., sale proceeds).
  • May increase long-term borrowing costs if not repaid quickly.

Related Terms

Additional Terms

Public Realm Improvements

Public realm improvements are enhancements to public spaces such as sidewalks, parks, plazas, and streetscapes, often funded or contributed by. more

Mortgagee in Possession

A mortgagee in possession is a lender who takes control of a property after borrower default, but before foreclosure or power of sale. The lender. more

Lease Surrender Agreement

A lease surrender agreement is a negotiated contract between a landlord and tenant that ends a lease before its scheduled expiration. Terms may. more

Green Infrastructure

Green infrastructure refers to natural or engineered systems that manage stormwater, reduce heat, and improve sustainability in developments.. more

Escrow Holdback

An escrow holdback is a portion of funds withheld at closing and held in escrow until specific conditions are met, such as completion of repairs,. more

Underused Housing Tax

The Underused Housing Tax (UHT) is a federal annual 1% tax on the value of vacant or underused residential property owned by non-resident,. more

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