Closed Mortgages

A closed mortgage is a popular and widely used type of mortgage in Canada. It offers stability and predictability by providing borrowers with fixed terms and conditions for the duration of the mortgage term. This page provides an overview of closed mortgages and highlights their key features and benefits.

Key Features of Closed Mortgages:

Fixed Interest Rate: One of the primary advantages of a closed mortgage is the fixed interest rate. The interest rate remains unchanged throughout the term of the mortgage, providing borrowers with the assurance of consistent monthly payments. This stability allows homeowners to budget effectively and plan for their financial obligations with confidence.
Term Length Options: Closed mortgages offer a range of term lengths, typically ranging from 1 to 10 years. You can choose a term length that aligns with your financial goals and preferences. Shorter terms may offer lower interest rates, while longer terms provide greater stability and protection against potential interest rate increases.
Prepayment Options: While closed mortgages have restrictions on prepayments, they often include prepayment privileges that allow borrowers to make additional payments towards the principal balance. This helps homeowners pay down their mortgage faster and reduce the overall interest paid over the term. Most closed mortgages allow for annual lump sum prepayments, usually up to a certain percentage of the original mortgage amount, without penalty.
Term Commitment: Closed mortgages come with a term commitment, which means that the mortgage cannot be fully paid off or refinanced before the end of the term without incurring penalties. This term commitment provides lenders with the assurance of a stable income stream and allows them to offer competitive interest rates.
Penalty Considerations: If you need to make changes to your closed mortgage before the term is complete, such as selling your property or refinancing, you may be subject to prepayment penalties. These penalties are typically calculated based on the interest rate differential or a predetermined formula set by the lender. It’s important to carefully consider your future plans and financial circumstances when opting for a closed mortgage.
At Esto Mortgage, we specialize in closed mortgages tailored to meet the specific needs of Canadian homebuyers and homeowners. Our experienced mortgage professionals can assist you in selecting the right term length, understanding the prepayment options, and navigating the mortgage process with ease.
Contact us today today to discuss your mortgage requirements, explore closed mortgage options, and receive personalized advice and guidance. We are committed to helping you make informed decisions about your mortgage financing, ensuring that you secure favorable terms and achieve your homeownership and financial goals.

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