Closed Mortgage

What is a closed mortgage?

Closed Mortgage Definition: A closed mortgage is known as a closed-end mortgage, which establishes restrictions that the balance of a mortgage cannot be pre-paid or paid in full at an earlier date without penalty.

There are other stipulations with a closed mortgage, such as no renegotiations or refinancing is permitted unless the borrower is willing to incur penalty costs and pay these to the lender. This type of mortgage is ideal for a homeowner who is comfortable with their current situation and doesn’t expect to move, resell, or change the loan terms.

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