Posted in Finance, Accounting and Economics Terms, Total Reads: 247
Definition: Open-End Mortgage
Open-end mortgages give owners of residential properties, a sort of flexibility by using the equity that is invested in their homes as an origin of credit. The remainder of the amount may be borrowed as the amount that is needed and the balance be paid down.
This sort of a scheme provides as opposed to a lump-sum amount, a series of credits. These mortgages are analogous to credit cards in the sense that the allow the borrower to borrow and pay debts as and when needed.
Despite the obvious advantages of flexibility that is provided to the homeowners, there are also clear disadvantages. If the interest rate goes up owing to the credit score, there are chances of steeper finance charges than expected, making the repayment all the more difficult.