What is 'Open-End Mortgage'
An open-end mortgage is a type of mortgage that allows the borrower to increase the amount of the mortgage at a later time. Open-end mortgages permit the borrower to go back to the lender and borrow more money if certain conditions have been met. There is usually a set dollar limit on the additional amount that can be borrowed.
BREAKING DOWN 'Open-End Mortgage'
For example, borrower A obtains a $200,000 mortgage to purchase a home. He gets an open-end mortgage that allows him to go back and borrow additional money over the life of the loan, as long as the total outstanding principal does not exceed a certain amount (such as 80% of the appraised value of the home). It is similar to how a HELOC allows homeowners to pull equity out of their homes.