What distinguishes an open mortgage from an open-end mortgage?

An open mortgage allows the borrower to make additional payments or pay off the entire loan balance without incurring any penalties. This flexibility is a key feature that appeals to borrowers who may want to pay down their debt more quickly. In contrast, an open-end mortgage, often referred to as a line of credit, is expandable and allows borrowers to draw upon additional funds as their financial needs change, essentially letting them borrow more than their initial loan amount.

Understanding this difference helps clarify why the correct answer highlights that an open mortgage permits prepayment while an open-end mortgage provides the ability to increase borrowing capacity. This unique characteristic of open-end mortgages enables borrowers to utilize equity in their property over time, which is not a feature of traditional open mortgages.