Open vs. Closed Mortgages

Open vs. Closed Mortgages: What's the Difference?

When it comes to mortgages, the choices can feel as overwhelming as the dessert table at a community potluck - so many options, and you want to pick the right one. At Prosperity Credit Union, we like to keep things simple, so let’s break down two common mortgage types: open and closed.

Open Mortgages: Flexibility Galore 

With an open mortgage, you can pay it off in full or make extra payments whenever you want, no strings attached. This is a great option if you expect a windfall (hello, bumper crop!) or if you plan to sell your home soon. The trade-off? Open mortgages usually come with slightly higher interest rates. You pay for the freedom to make changes whenever it suits you.

Closed Mortgages: Set It and Forget It 

With a closed mortgage you get a lower interest rate, but there are limits on how much extra you can pay each year. If you want to break your mortgage early, you might face a penalty. Closed mortgages are a solid choice if you like knowing exactly what your payments will be to stay within your budget and don’t expect any major financial surprises.

Which One's Right for You? 

If you value flexibility and think you might want to pay off your mortgage faster, an open mortgage might be your best bet. But if you prefer a lower rate and predictable payments, a closed mortgage could be the better fit.

Still unsure? That’s what we’re here for! Whether you’re a first-time home buyer or a seasoned owner, our team at Prosperity Credit Union is happy to walk you through your options and help you find the best mortgage for your life.

After all, home is where the heart is - and where you should feel financially comfortable, too. Give us a call or stop by your local branch. We’re always here to help (and maybe even share a good potluck recipe while we’re at it).