- Closed fixed: rate and payment set for the term; limited prepayments; penalty is usually the greater of 3 months’ interest and an IRD.
- Closed variable: prime ± a spread; penalty usually 3 months’ interest.
- Open: repay any amount at any time without a penalty, at a higher rate; usually short terms.
- Readvanceable: a mortgage inside a HELOC plan, so repaid principal can be borrowed again.
The main types
- Closed fixed-rate. The standard choice. Your rate is locked for the term (often 1 to 10 years). You can prepay within the bank’s annual privileges; anything more triggers a penalty. See fixed rates.
- Closed variable-rate. Your rate is the bank’s prime plus or minus a spread. Some banks change the payment when prime changes; others keep it fixed and change the principal portion. See variable rates.
- Open mortgages. Pay off any amount at any time without a penalty. Useful if you expect to sell or receive a large sum soon; the rate is higher than a closed term.
- Cash-back mortgages. The bank pays you a percentage of the mortgage at closing in exchange for a higher rate; if you break the term early the contract may require you to repay some of it.
- Readvanceable plans. The mortgage sits inside a home equity plan with a line of credit. See HELOCs and readvanceable mortgages.
Prepayment privileges by bank
How much you can pay down early on a closed mortgage, in each bank’s words:
| Bank | Prepayment privileges (closed) |
|---|---|
| RBC Royal Bank | 10% lump sum a year, 10% payment increase every 12 months, plus Double-Up payments. |
| TD Canada Trust | 15% lump sum a year and payment increases up to 100%, once per calendar year. |
| Scotiabank | 10%, 15% or 20% of the original principal a year, depending on the options chosen. |
| BMO Bank of Montreal | Up to 20% payment increase or lump sum (product-dependent); Smart Fixed is 10% / 10%. |
| CIBC | 10%, 15% or 20% a year depending on product; payment increases up to 100%. |
| National Bank | 10% of the principal a calendar year, plus an extra payment up to your regular payment on each payment date. |
What we don’t cover here
Reverse mortgages, commercial mortgages and investment-property lending are outside this guide. FCAC explains reverse mortgages (up to 55% of the appraised value minus any mortgage balance, under its home equity guide), and the MITEY Network’s CanadianBanks.ca covers the institutions themselves.
Rules change. Every figure on this page links to the official source and shows when we checked it. If something looks out of date, tell us and we will re-check.
Frequently asked questions
Which product should I choose?
Start with how likely you are to move, refinance or pay down a lump sum in the next few years. If any of those is likely, the prepayment privileges and penalty method matter more than a small rate difference. Price your scenarios in the bank vs broker calculator.
Sources
- Reduce or avoid prepayment penalties — FCAC, checked Oct 31, 2026
- Borrowing money using home equity (HELOC, home equity loan, reverse mortgage) — FCAC, checked Oct 31, 2026
- Mortgage terms and amortization — FCAC, checked Oct 31, 2026
Educational information only, not financial, legal or tax advice. BankMortgages.ca is independent and is not affiliated with, endorsed by or paid by any bank named on this site. Bank terms change: confirm every rate and term with the lender and the official sources linked on each page before you act. Read the full disclaimer.