Definition
An open mortgage can be repaid in full at any time without a prepayment penalty. This flexibility comes at a cost: the interest rate is typically 0.50% to 1.50% higher than a comparable closed mortgage.
Open mortgages are particularly useful in two situations: (1) you are expecting a large sum (inheritance, bonus, sale of another property) with which you plan to repay the mortgage in the coming months, or (2) you have signed a purchase agreement for a new property and expect to sell the current one quickly.
For most borrowers without a short-term full-repayment plan, a closed mortgage with good prepayment privileges (10-20% per year) offers a better cost/flexibility ratio.