Mortgage

Open Mortgage: permits repayment of the amount at any time, without penalty. Repayment terms are more flexible than a closed mortgage, which do not usually allow for prepayment without penalty Pros Payment terms are flexible No penalty Cons Higher interest rate

Variable Rate: interest rate is not fixed Pros Initial rates are low It allows for repayment before rates go up Cons Rates could increase month-to-month The cap on an interest rate is typically higher

Closed Mortgage: cannot be repaid without prepayment penalties during its term, except as permitted in the mortgage agreement. Pros Interest is lower Cons Penalty costs Terms are longer No flexibility

Fixed Rate: a loan where the interest rate doesn't fluctuate during the fixed rate period of the loan, this allows the borrower to accurately predict their future payments Pros Your interest rate isn’t going to change Cons The interest rate will be higher than a variable rate It can take longer to pay off the loan because the APR is higher

Convertible Mortgage: gives the borrower the option to convert to a fixed-rate mortgage, convertible are marketed as a way to avoid rising interest rates and usually include specific conditions Pros Saves on refinance costs Cons You will have a higher rate for the fixed with a convertible loan

Split-term Mortgage: allows you to choose a split such as 30/70 or 50/50 to define the loan periods during which the interest rate is fixed or adjustable Pros Can make additional payments on variable portion Provides more certainty in budgeting than full variable loans Cons Allows limited additional payments only

Reverse Mortgage: a special type of home loan for older homeowners (62 years or older) that requires no monthly mortgage payments, borrowers are still responsible for property taxes and homeowner's insurance Pros Eliminate any existing mortgage Heirs inherit remaining home equity after paying off the reverse mortgage loan Cons Not well understood by many people

Refinancing: finance something again with a new loan at a lower rate of interest Pros Lower Interest Rate Cash Out Your Equity Cons Refinancing Costs