closed mortgage loan


A mortgage loan that cannot be repaid before the end of the loan term unless the borrower pays a penalty.

A closed mortgage loan always has a lower interest rate than a comparable open mortgage loan.

The penalty for early repayment varies. Some examples are: the total interest owing on the mortgage loan, a three-month interest penalty on the outstanding principal, or the difference between the interest rate and the currently posted rate applied to the remaining term.

(The specific penalty is specified in the mortgage loan document.)

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