Open Vs Closed Mortgages

Open Mortgage Disadvantages

The major disadvantage of this type of mortgage is by far the interest rate. It’s a lot higher than the rates associated with other mortgages since there are no fees for paying it off early. It’s true buyers still pay less to pay off their home early than they do in interest rate fees, it’s still a turn-off for some borrowers. The rates are often variable, which means borrowers don’t know what might happen if the rates change and how much they change. This can be a good thing if the rates go down, but it can be an expensive change if rates rise significantly. Not all buyers want to saddle themselves with a variable rate mortgage that might fluctuate their payment and their overall cost of homeownership by thousands of dollars over the life of the loan.

It's time to move onto learning about closed mortgages. Continue reading to reveal the advantages first!