Most Canadians have a closed mortgage product. Again, it goes back to term, if you get a 5 year term mortgage (fixed rate or variable rate) your mortgage has restrictions in those 5 years. You might be subject to a penalty if you payoff your mortgage in full before the term expires. This can be only three months of interest or much more, depending on the terms and conditions of the mortgage product you chose.

It is very important to have a candid discussion with your mortgage broker about the length of time you really expect to live in the home, or if you plan to take equity out of the property (refinance) before the term ends. The mortgage broker is there to help you save money and does not want to subject you to unnecessary penalties if you break the term.

Another feature to closed mortgages is payment privileges. There are rules around putting lump sums on the mortgage without incurring a penalty. If you get your annual bonus and you want to put it towards the principle of the mortgage, you need to make sure if there is a specific date you need to do it by and how it can be done without a penalty.