Open vs closed mortgages
Compare repayment flexibility and the conditions attached to paying a mortgage off early.
The key difference
An open mortgage allows repayment without a prepayment penalty. A closed mortgage limits extra repayment under its contract, although it may include prepayment privileges. Flexibility and the interest rate need to be considered together.
| Consideration | Open mortgage | Closed mortgage |
|---|---|---|
| Early repayment | No prepayment penalty. Confirm any other discharge costs. | Charges may apply beyond the contract’s privileges. |
| Questions for the lender | What fees remain if I repay the balance? | What extra payments are permitted, and how are penalties calculated? |
Questions to take to the lender
- Obtain the actual prepayment privileges in writing.
- Keep discharge and administration costs separate from a prepayment penalty.
Explore the published products
Sources and scope
General information for comparing options. Product terms and individual eligibility must be confirmed with the lender.
Continue exploring
Fixed vs variable mortgage rates
Compare rate certainty, payment behaviour, and what can change during the term.
Three-year vs five-year fixed mortgages
Compare when you will need to renew, rather than assuming the lower starting rate wins.