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Sam · Posted: Mon Apr 12, 2004 5:31 am Post subject: Open Mortgage

Open mortgage is a kind of home loan that allows a borrower to make a partial or full payment of the principal loan amount at any time without any penalty.

Some of the features of open mortgages are given below:

Open mortgages are offered for shorter loan term, for instance 6 months or 1 year.
These home loans do not have a prepayment penalty clause. Hence, you don't have to pay additional amount for repaying the loan before maturity.
Open mortgages generally offer high interest rates compared to other kinds of home loans.
You can contribute additional amount apart from the regular monthly payment. So you can save thousands of dollars in interest throughout the life of the loan.
Open mortgage provides you with flexible payment option. This implies that you can sell off the property prior to the end of the loan term by paying off the mortgage.

With an open mortgage and a good payment history, you can try and improve your credit score. This is because the loan amount for this kind of mortgage is usually higher and regular payments will prove that you are a creditworthy borrower.

Guest

My parents are paying almost $3200 a month on interest only loan program. I am not sure how they got into this but I am researching on how I can get them out of this black hole. How can I help my folks in turning their current loan to putting more money in the principal loan rather than the interest. My understanding is Open Loan is being practice in Australia and Europe. Is there a type of similar loan in the US? If so, what are the criteria to qualify?

Posted: Wed Mar 11, 2009 10:55 pm Post subject:

Interest only loans are available in US. You can ask your parents to make some extra payments towards the principle balance of the loan. As far as the criteria for qualifying for the open loan is concerned, it is similar to other loans. The lenders will check if you have a good financial situation and credit score.

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Open Mortgage