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Open Mortgage, Flexibility at What Cost?



The Open Mortgage product is not very popular, mostly due to the fact that the interest rates for this kind of product are usually pretty high.

Clients that use this product are mostly clients that are in transition between one property and another, for example, they had a new house built and the house is not finished in time.

They have not sold their existing property and the current term on the current property expired. They do not want to renew the mortgage on the current property for a long period of time in a fixed mortgage term, because they want to sell the house to move into the new house.

If they lock it in, they will have to pay the payout penalties associated with the term of the new mortgage. With an open mortgage, they can pay it out in full at any time with no pay out penalties.

Pros of an open mortgage:

  • Can be paid out at any time without a penalty.
  • Mortgage rate can be set for a term for example you can have a 6 month open at 8.20% and it will stay at 8.20% throughout the 6 months even if rates go up.
  • Assumable
  • Portable

Cons of an open mortgage Product:

  • Very high interest rates.

For most clients this is not a product that they are comfortable with.

If an open mortgage is not right for you and you would like to learn more about other mortgage products, please go to the mortgage product page.

There is a lot of helpful information that should help you make an informed decision about a mortgage product that is right for you.

If you are not ready to decide on a mortgage product just yet, and you would like to learn more aobut mortgages in general, please visit our home page, for helpful links to relevant information.

We are also in the process of compiling a complete homebuyers workbook for you, and this should be done pretty soon, so please visit regularly and be one of the first to pick up this very handy little pocketbook.