What is a Hybrid Mortgage?

Undecided of what mortgage rate and term you should opt for in such an uncertain rate economy? A hybrid mortgage is a great option for someone who doesn’t want all their eggs in one basket. A hybrid mortgage allows a consumer to divide their mortgage into two or more separate components/products, each with their own rate, term, and length. The most popular type of hybrid mortgage is where half of the mortgage is in a fixed term and half is in a variable rate mortgage.

Some of our lenders will allow a consumer to split up their financing and take advantage of various rates and terms on ONE property. For example, if someone has a $500,000 mortgage, they can split this into segments where you have $200k in a 5-year fixed rate, $200k in a 2-year fixed rate and $100k in a variable term. This could provide consumers with the best of all worlds and diversification. Think Investment strategies – many of us hedge our money, you can do the same with a mortgage!

No matter your mortgage experience or financial situation, a hybrid mortgage can be a good option if you have differing risk tolerances for the mortgage rate market and can’t decide between the standard fixed and variable options.

MMGSeptember 1, 2023