Closed Mortgage

Overachiever looking to pay off your mortgage early? Then, a closed mortgage might not be right for you. The interest rate for a closed mortgage is generally lower than the interest rate for a comparable open mortgage. However, this type of loan restricts the Borrower’s ability to pay off their mortgage early by imposing penalties. Most contain some form of prepayment privilege but they are limited. For a variable-rate closed mortgage (or ARM) the penalty is typically equal to 3 months of interest. For a fixed-rate closed mortgage the penalty is typically the greater of 3 months interest or the Interest Rate Differential.

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About The Author

Don Scott

Don Scott is the founder of a challenger mortgage brokerage that is focused on improving access to mortgages. We can eliminate traditional biases and market restrictions through the use of technology to deliver a mortgage experience focused on the customer. Frankly, getting a mortgage doesn't have to be stressful.

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Managing Uncertainty in Today’s Mortgage Market

By Don Scott • May 27, 2025

Feeling hesitant about entering the housing market today due to political or economic uncertainty is understandable. The landscape can seem unpredictable—interest rates shift, housing supply fluctuates, tariff news hits the headlines and policies change. As a mortgage broker, we see this uncertainty every day. But here’s the truth: while there is much beyond your control, mastering the factors that you can control is what will make the biggest difference in your journey to homeownership.