Some Mortgage Terms explained

Sometimes, I meet people who are confused with closed and open mortgage, open mortgage is where you can pay off your mortgage without penalty anytime, but some people think, it has something to do with rate change, they think it is not locked and rate can change for them at any time, and closed mortgage they link where rate is fixed for the whole term. As more educated people are, likely they will be aware of what they are getting into. So I thought, I should explain few terms here, and also in next blog, I plan to write about RightMortgage®, anyone knows, what it is about?

CLOSED MORTGAGE:
A mortgage whose terms state that it cannot be paid out, even with a penalty, unless the lender agrees. In some cases, a closed mortgage may be discharged at a defined cost, usually Interest Rate Differential (IRD), but sometimes with a punitive penalty such as full interest to maturity.

OPEN MORTGAGE:
This allows borrower to pay back the borrowed funds without notice or penalty.

PORTABLE MORTGAGE:
A mortgage which allows you to transfer the existing amount and terms of your mortgage over to a new property without penalty. The mortgage will, of course, have to be registered on title of the new property, so strictly speaking it is not identical in all respects. While most mortgages have a portability feature, in the event you might need more money when you transfer the mortgage over to the new property, make sure you either have the right to blend in any new funds required, or can arrange the additional funds separately.

To learn about more terms, visit the website

http://www.mortgagealliance.com/terms-glossary/mortgage-terms-glossary.asp