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Closed Mortgage

A mortgage with restrictions on how much extra you can pay during the term, typically limited to 10-20% of the original balance per year. Prepaying beyond the allowed amount triggers a penalty (usuall

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A mortgage with restrictions on how much extra you can pay during the term, typically limited to 10-20% of the original balance per year. Prepaying beyond the allowed amount triggers a penalty (usually three months' interest or the interest rate differential). Closed mortgages offer lower rates than open mortgages in exchange for less flexibility.

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