When does the 'Open Rate Premium' become worth it for you?

Question

Accepted Answer

| Scenario         | Cost Details                | Comments                                  |
|------------------|----------------------------|-------------------------------------------|
| 2% Premium (Closed)  | ~$10,000/year (~$833/month) | 2% of $500,000 is $10,000/year, but this is a simplified estimate; actual premiums vary by lender and product |
| Early Break of 5-year Term (Year 2) | Penalty depends on IRD or 3 months interest; for a 4.29% rate on $500k, IRD penalty could be roughly $10,000-$15,000 but varies by lender and contract | Break cost scenario for closed products    |
| Open Mortgage    | No penalty cost             | Open mortgages have no penalties but higher interest rates; 'mathematically superior within 18 months' is a generalization and depends on rate differential and break timing |

When does the 'Open Rate Premium' become worth it for you?

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Technical Research Verification

Open vs. Closed Mortgages in Canada: 2026 Rate Comparison, Penalties & When to Choose Each

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When does the 'Open Rate Premium' become worth it for you?

Need a Deeper Breakdown?

Technical Research Verification

Open vs. Closed Mortgages in Canada: 2026 Rate Comparison, Penalties & When to Choose Each

Related Questions

What is the technical difference between a VRM and an ARM?

How do I calculate the 2026 'Trigger Rate' for you?

Why is the variable-to-fixed conversion rule so critical?

How do 2024 reforms impact insured variable products?