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  3. Understand your mortgage
  4. Open-closed and convertible mortgages

Open, closed and convertible mortgages

What's the difference? 

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Open mortgages

An open mortgage can be paid off in part or in full at any time with no additional charges. It can also be converted to another mortgage type at any time without prepayment charges. While open mortgages offer the most flexibility, they generally have a higher interest rate. An open mortgage might be right for you if you are looking to pay off your mortgage in the near future.

Closed mortgages

These are the most popular type of mortgage as they generally offer lower interest rates than open mortgages. A closed mortgage has prepayment charges if you choose to pay it off prior to maturity, refinance your home or transfer your mortgage to another lender. A closed mortgage might be right for you if you are looking to keep your interest costs to a minimum and pay down your mortgage faster.

Convertible mortgages

A convertible mortgage has the same features as a closed mortgage but can be converted to a closed mortgage with a longer term at any time without any prepayment charges. A convertible mortgage might be right for you if you think mortgage interest rates might decrease in the short-term or you need more time to decide which mortgage option is right for you.