Have You Considered Opting for a 50/50 Mortgage

Have You Considered Opting for 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. Therefore, this means you get the best of both world. 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.


Therefore, making it 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 a 50/50 product, 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:

  • 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
  • Savvy first-time homebuyers

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 the 50/50 option is a fairly new offering, according to a recent study by the Canadian Association of Accredited Mortgage Professionals (CAAMP), 7% of Canadian mortgage holders have 50/50 mortgages. Compared to 28% with variable-rate mortgages and 65% with fixed-rate mortgages.


With Loanerr, borrowers can chat with our Mortgage Professionals online to help with finding the right product.



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