DCHP-3

closed mortgage

DCHP-2 (Aug 2012)
n. — Finance, Administration

a mortgage with a fixed-term interest rate and limited prepayment options.

Type: 5. Frequency — The term closed mortgage is more frequent in Canada than in the US (see Chart 1). It also has a long history in the Canadian finance sector, going back at least to the early days of the 20th century (see the 1909 and 1911 quotations), so that its extension to consumer mortgages in the post-war period is consistent with established banking terminology (see Royal Bank of Canada reference).
See also COD-2, s.v. "closed" (4), which is marked "Cdn".

Quotations

1909
BOND ISSUE 1st Mortgage 6 per cent, issue of 1909 (closed mortgage)
1911
These bonds are issued for the purpose of furnishing additional working capital to extend the Company's operations. Under the trust deed the issue represents a closed mortgage on all the fixed assets of the Company. The proportion is therefore only 60%. The remaining $800,000 can be issued subject to the mortgage, upon new property only, and to the extent of 66 2/3% of the actual outlay. Furthermore, no additional bonds may be issued unless the net earnings for the year previous to such date of issue shall have amounted to three times the amount necessary for interest on existing bonds.
1920
The issue of first mortgage bonds is accured [sic] by a deed of trust and mortgage, constituting a first closed mortgage on the lands and buildings, which, it is estimated, will cost one million dollars.
1937
New first mortgage bonds, $14,000 000, will be a closed mortgage bearing interest at 4½ per cent.
1953
Last week we discussed the plight of a Toronto woman who held a 20-year closed mortgage loan.
1976
Prime condo first property sold $36,900 with $5,000 down payment, $25,000 at 11% closed mortgage. Best offer, will buy.
1978
An open mortgage can be repaid before maturity while a closed mortgage cannot.
1989
If you have a closed mortgage, you will have to pay a penalty if you want to pay it off faster.
1994
The cost of a one-year closed mortgage has shot up to 9.50 per cent at the major banks from 6.25 per cent a year ago.
2006
A closed mortgage may be a good choice if you'd like to have a fixed payment that will allow you to adjust your budget to your new lifestyle.
2015
The penalty for breaking a closed mortgage is generally the greater of three months interest on the remaining balance or the interest for the remainder of the term on the remaining balance - all calculated using something called the interest-rate differential.

References

Images

Chart 1: Internet Domain Search, 10 Sep. 2012

Chart 1: Internet Domain Search, 10 Sep. 2012