Mortgagesby Kyle Benzies
    Education 9 min read

    Open vs. Closed Mortgage: Which Is Right for You?

    A mortgage decision which influences your ability to adjust your mortgage agreement. Life changes, and sometimes you need flexibility — here's what to consider.

    Kyle Benzies

    Licensed Mortgage Broker

    Open unlocked padlock with checkmark versus closed padlock with penalty fee tag representing open and closed mortgage terms

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    Benefits & Challenges of Each TypeWhich Is More Common?When Would a Broker Recommend an Open Mortgage?

    When it comes to deciding on a mortgage, the choices can appear endless. A licensed mortgage broker can help guide you through the tough decisions — including what the heck is an 'open' or 'closed' mortgage? An open mortgage has no repayment restrictions, meaning you have the flexibility to pay off your mortgage whenever you like without incurring pre-payment penalties. A closed mortgage has restrictions on how payments can be made towards the principal balance, meaning that the mortgage can't be refinanced or paid off prematurely without risk of a pre-payment penalty.

    Benefits & Challenges of Each Type

    Open Mortgage Benefits:

    The ability to pay down your mortgage faster by increasing payment frequency
    Refinancing through a lender is often easier and less costly
    Borrowers are sometimes allowed to make lump-sum payments at any time, adding to their home equity faster

    Open Mortgage Challenges:

    The flexibility often means higher interest rates to compensate the lender

    Closed Mortgage Benefits:

    Usually much lower rates than an open mortgage, which can save you money overall
    Repayment schedule is steady and dependable, making budgeting easy

    Closed Mortgage Challenges:

    If circumstances require you to refinance, it can be very expensive
    Pre-payment penalties on lump-sum payments can also be very expensive

    Which Is More Common?

    A closed mortgage is far more common in Canada. Most people expect their life trajectory to be consistent and aren't expecting significant increases in income or financial gifts. This makes them better candidates for a closed mortgage because overall, they benefit from the lower rates.

    A lower rate calculated over a 25-year amortization can make a big difference in your pocket!

    When Would a Broker Recommend an Open Mortgage?

    There are a number of reasons a licensed mortgage broker would recommend an open mortgage:

    You're receiving a sizeable inheritance or financial gift in the near future — Ideally you would invest it by paying off a lump sum of your principal balance
    You're expecting a large increase in income — If your income is about to increase significantly, it may make sense to pay more towards your principal balance
    You know you'll be selling your home in the next few years — If you only plan to own for less than the length of your mortgage term, you shouldn't face pre-payment penalties when you sell

    Connecting with a licensed mortgage broker can benefit you significantly with this decision. They'll know the proper questions to ask in order to recommend a suitable option for your unique lifestyle.

    For a no-obligation call to discuss your mortgage options, reach out today!

    The information provided on this page is for educational purposes and should not be implicitly relied upon. Conditions may apply and information may not be 100% up to date. Contact a licensed mortgage professional for the most current conditions and program offerings.

    Have questions about open vs. closed mortgage: which is right for you??

    Call for a free, no-obligation consultation, or run the numbers first with the mortgage calculators.

    (604) 780-5173

    About the author

    Kyle Benzies, Licensed Mortgage Broker

    I'm a licensed mortgage broker serving clients across British Columbia, Alberta, and Ontario. I work with a network of over 100 lenders — banks, credit unions, monoline, and alternative lenders — to find financing that fits each client's situation rather than a single institution's product shelf. Everything I publish here is written to explain how Canadian mortgage lending actually works, in plain language.

    More about KyleAsk a question(604) 780-5173

    Published November 30, 2025

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    Kyle is ready to help you find the perfect mortgage solution. No obligation, no cost.

    Kyle Benzies

    Kyle Benzies

    Licensed Mortgage Broker

    through DLC A.I.M.I. Collective Mortgage Group Inc.

    Dominion Lending CentresA.I.M.I.

    Kyle helps families and investors find the right mortgage — with personalized advice and access to a network of lenders.

    (604) 780-5173info@kylebenzies.ca
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    Licenses

    BC — DOMINION LENDING CENTRES A.I.M.I. COLLECTIVE MORTGAGE GROUP (Dominion Lending Centres) — Mortgage Broker License #MB600614AB — A.T.S.A.I.M.I. Collective Inc. o/a Dominion Lending Centres A.I.M.I. Collective Mortgage (Dominion Lending Centres) — Mortgage Broker License #CON-00131441ON — A.T.S.A.I.M.I. Collective Inc. operating as Dominion Lending Centres A.I.M.I Collective Mortgage Group (Dominion Lending Centres) — Mortgage Agent Level 2 License #M25001608