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Which Mortgage Type Should You Choose: Open, Closed, Hybrid, Convertible, or Reverse?

When financing your dream home, we aim to explain and provide you with all the information about your future mortgage. With various mortgage types available in the Canadian market, it's essential to understand the options and choose the one that aligns with your financial goals. In this article, the IK Financial team will explore different mortgage types to help you make an informed home finance decision.

Open Mortgages

With an open mortgage, homeowners have the freedom to make large payments or even pay off the entire mortgage without facing penalties from lenders. This flexibility can be a significant advantage for individuals who expect fluctuations in their finances or plan to sell their home in the near future. Although open mortgages may come with slightly higher interest rates compared to closed mortgages, the freedom they provide can outweigh the cost.

Closed Mortgages

Closed mortgages come with a pre-determined interest rate and term, providing borrowers with a clear understanding of their financial obligations. While closed mortgages typically have lower interest rates than open mortgages, they do come with restrictions. Borrowers who wish to pay off their loan before the end of the closed term may incur penalties. However, many lenders allow borrowers to make annual lump sum payments, offering some flexibility to borrowers.

Hybrid Mortgages:

Hybrid mortgage type allows borrower to combine various mortgage products within a single mortgage application. For instance, a hybrid mortgage could include a fixed rate portion, a variable rate portion, or even a line of credit portion. This flexibility can be advantageous for savvy borrowers who want to tailor their mortgage to their unique financial goals and risk tolerance.

Convertible Mortgages

Convertible mortgages offer a unique blend of flexibility and stability. At the beginning of the term, borrowers can choose to start with an open mortgage and later switch to a closed mortgage, or vice versa. This option is excellent for homeowners who want to adapt their mortgage to changing financial circumstances or market conditions.

Reverse Mortgages

Reverse mortgage type allows homeowners to tap into their home equity, receiving either a lump sum payment or monthly cash payments, typically for living expenses. Unlike traditional mortgages, there are no monthly payments required. Instead, the loan balance grows over time and is settled when the homeowner no longer occupies the property as their principal residence.


Selecting the right mortgage type is a crucial decision in your homeownership journey. Each mortgage type offers a unique set of benefits and drawbacks, so it's essential to assess your financial situation, long-term goals, and risk tolerance before making a choice. Consulting with a mortgage agent at IK Financial can provide valuable guidance in choosing the mortgage that aligns best with your needs and preferences. Book your complimentary consultation today by visiting ikfinancial.com
IK Financial Mortgage Team operates on behalf of Mortgage Edge. Lic#10680

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2023-11-13 08:00