Mortgage term
Open mortgage
Definition
A mortgage you can pay off or refinance at any time without penalty. Rates are materially higher than closed mortgages — usually 1%–3% above. Rarely the right choice unless you know you're selling within 12 months.
Open mortgages exist for very specific situations: an imminent sale, an expected inheritance, or a bridge between transactions. If you don't have one of those specific short-term needs, a closed mortgage almost always costs less over any 6-month+ horizon.