Have you considered a 50/50 Mortgage?
Hybrid mortgages – also known as 50/50 mortgage products – include an equal mix of fixed-rate and variable-rate components within your single mortgage. This means you get the best of both worlds – the security of fixed repayments with the flexibility of a variable rate.
Although there was a time in recent years when mortgage experts considered a variable rate mortgage as the obvious choice to save mortgage consumers money over the long term, with fixed rates remaining near historic lows, a 50/50 mortgage may be a great alternative for you.
In essence, since it’s extremely difficult to accurately predict rates over the long term, a 50/50 mortgage offers interest rate diversification, which can help reduce your level of risk.
If you opt for the 50/50 Balanced Mortgage, half of your mortgage is locked into a five-year fixed rate and half is at a five-year variable rate. You can lock in your variable-rate portion at any time without paying a penalty. As well, each portion of the 50/50 mortgage operates independently – like two separate mortgages – yet the product is registered as only one collateral charge.
The 50/50 mortgage product is well-suited to a variety of borrowers, including those who:
- Would normally go fully variable but are afraid prime rate is at its bottom
- Aren’t comfortable being locked into a fully fixed rate
- Can’t decide between a fixed or variable mortgage
Some features of the 50/50 mortgage include:
- 20% annual lump-sum pre-payment privileges*
- 20% annual payment increase ability*
- Portability (the option to transfer your existing loan amount to a new property without penalty*)
As always, if you have questions about the 50/50 mortgage product and whether it’s right for you, or other mortgage-related questions, I’m here to help!
Vijay Gandhi is an independent mortgage planner and industry insider & CENTUM Agent. If you are purchasing, refinancing or renewing your mortgage, contact Vijay or apply for a Mortgage Check-up to obtain the best available rates and terms.
Whether you are planning to buy-sell-lease-invest your first home or your investment, contact us today!
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