Open vs. closed mortgage:
Open mortgage means you can pay out your mortgage without penalty, while if you pay out your closed mortgage, the lender usually charges 3 months' interest as penalty. The rate for open mortgage is higher than its corresponding closed mortgage, but if you are going to move during the term of the mortgage, this might be an option.
Variable vs. fixed rate:
Variable rate changes whenever Prime rate changes. The Prime rate, which in a sense is determined by Bank of Canada, currently is at 4.75%. For residential first mortgages, borrowers usually can get a Prime minus a discount rate. How much the Prime rate can be discounted depends on your credit score, employment stability, etc.
Term vs. Amortization:
Term determines the contractual obligation between you and the lender. For example, if you get a 5 year fixed rate at 5.24%， then the lender will commit this rate to you for 5 years, at the end of the term you have to renegotiate the mortgage with the original lender OR have the complete freedom to go to a different lender.
Amortization means how long it takes you to pay off your mortgage. Lenders need this piece of information to calculate your monthly payment. All conditions being equal, the longer the amortization, the larger mortgage loan you can get.
Amortization of 40 years does not necessarily mean you have to pay out the loan over 40 years. Most lenders in Canada allow borrower, at least , to prepay 15% of their original loan amount each year. Of course, you can pay out the mortgage entirely at the end of the term if you have already accumulated enough capital.
