Who is this for?
If you’re confident that you can pay off your mortgage in the near term, you may want to opt for an open mortgage over a closed mortgage. That’s because an open mortgage can be repaid in part or full at any time without having to pay a penalty. Because of this flexibility, open mortgage rates tend to be higher than the rates available through closed mortgages.
Some people prefer to avoid being locked into any kind of deal – whether it’s a mobile contract, cable television agreement or home mortgage. If that describes you, then an open mortgage may be the way to go.
An open mortgage may not, however, be the best choice if you see little chance that you’ll be able to pay off your mortgage in the near term.
How will this help me?
An open mortgage is an excellent choice if you want maximum flexibility in how soon you can pay off your mortgage. In most cases, an open mortgage will allow you to pay the whole mortgage balance off at any time without incurring a penalty.
Some examples of when you may want to opt for an open mortgage:
- You’re expecting a windfall that would allow you to pay off part or all of your mortgage in the near future
- You’re flipping a home and expect to be able to pay off the mortgage with the proceeds
Additionally, with an open mortgage, you have the option of entering a closed mortgage down the road. Be sure to check with your lender to see how this option may work for you.
What else do I need to know?
Terms may vary
London Life’s open mortgages are available in six-month and one-year terms. In comparison, the closed mortgage comes with terms ranging from 6 months to 10 years.
Check the numbers
A London Life mortgage planning specialist can help you calculate the difference in interest costs if you go with an open instead of a closed mortgage. If the difference is substantial, ask yourself how likely it is that you’ll be able to take advantage of an open mortgage’s flexibility. If there’s little chance you’ll be able to pay off your mortgage prior to the term’s end, be sure to give a closed mortgage due consideration.
Connect with an advisor
Working with a financial security advisor can provide you with the tools and expertise you need to plan for the future.