What is an open end mortgage?

An open-end mortgage is a type of mortgage loan that allows the borrower to borrow additional funds on the same loan in the future, up to a certain limit. This type of mortgage gives the borrower more flexibility to access additional funds without having to take out a new loan.

Open-end mortgages are commonly used for home equity lines of credit (HELOCs), where the borrower can access funds as needed up to a predetermined limit. The borrower is only required to pay interest on the amount borrowed, rather than a fixed monthly payment.

Unlike a closed-end mortgage, where the borrower is given a set amount of money upfront and pays it back in fixed installments, an open-end mortgage allows the borrower to access additional funds as needed and pay it back over time.

However, open-end mortgages typically have higher interest rates than traditional closed-end mortgages, as they carry a higher level of risk for the lender. Borrowers should carefully consider their financial situation and ability to repay before taking out an open-end mortgage.