What’s the difference between a closed and open term mortgage?

  • Closed term mortgage is when the contract is typically written for terms of 1 to 10 years. Penalties may be triggered when you sell the house, want to refinance or optimize your mortgage, or in the event you won the lottery (!) and wish to end the contract before the term expires, also known as early repayment.
  • Open term mortgage is when the mortgage contract is written for a short term, usually 6 months or 1 year. No penalties are charged if the borrower wishes to end the contract before the term expires, but open term mortgages are usually more expensive due to their flexibility.