When shopping for a mortgage do you go with the fixed rate or the variable rate option? With a fixed rate, you do not have to watch the market closely because you know that your rate won’t change affecting your mortgage payments. With a variable rate you will experience the highs and lows of the market leading you to potentially save money.
What if there was a way for you to reap the benefits of a fixed rate and a variable rate? Luckily for borrowers, there is a way to get the best of both worlds: the hybrid mortgage.
Often referred to as a laddered mortgage or 50/50 mortgage, a hybrid mortgage allows you to lock in your loan at a higher fixed rate while the other part of your loan is at a lower variable rate. Your mortgage will be split in two, leaving you with the option to create different amortization and payment schedules for both components of your loan.
The benefits involved in a hybrid mortgage are plentiful. For instance:
For many people, the idea of having a fixed and variable rate mortgage combined is too much. They would prefer to stick with a more basic package that meets their financial needs. For others, a hybrid mortgage offers the perfect balance between a fixed and variable one.
Everyone’s borrowing needs are different which is why before you decide if a hybrid mortgage is right for you, it is beneficial to meet with a broker. When you sit down with a mortgage professional, they can advise you on whether you are an ideal candidate for a hybrid mortgage.Back
Canada’s mortgage website
Your home is your most valuable asset. It is probably the single largest investment you will make in your lifetime. Your home is more than a place to rest your head and raise a family. Your home contains equity. It is a treasured resource and in some cases, can even be used as an ATM (aka cash back mortgages and HELOCs – don’t worry we’ll get there).
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