Open Vs Closed Mortgages

Choosing Between Them

Both open and closed mortgages have their pros and cons, and choosing between them can be difficult for some buyers. The key for all potential buyers is to figure out what their family needs and wants. All buyers need to ask themselves is if they plan on living in this house for the long term. Is this their forever home, or does the buyer know they’d like to keep this house for a few years, sell, and move to the tropics? If the buyer knows they want to stay in this house for a limited time, it makes no financial sense to choose a closed mortgage with a potentially expensive interest rate differential. If the buyer wants to buy a home, pay it off, and retire in it without a mortgage, a closed rate is not a bad idea.

It’s all about what buyers are looking for. If buyers know this is not where they want to live forever, if they know their job could send them anywhere, and they know this house will not work with their lives forever, an open mortgage might be the better option. It’s a personal choice, and being educated on the pros and cons of both mortgage types is the way to choose the best rate, the best mortgage, and to save the most money.