Hybrid Mortgage


  • A mortgage that is split into multiple components, each with different term lengths, rates, and rate types. A hybrid mortgage allows a borrower take advantage of the low rates inherent in a variable rate mortgage, while benefiting from the stability of a fixed rate mortgage. If the prime rate goes down, the borrower can take advantage of the lower rate because of the variable rate component, but if the prime rate goes up, the borrower is partially insulated from the impact because of the fixed rate component. Also known as "mortgage laddering," a "laddered mortgage," or a "combination mortgage."

combination mortgage, laddered mortgage, mortgage laddering

Related Terms and Acronyms

  • Fixed Rate Mortgage (FRM) Acronym, Very Important,
    • A loan in which the interest rate and payments remain the same for the entire life of the loan. The interest rate and payment amounts are set at the time of loan origination.
  • Laddering Definition,
    • Staggering deposits into investments such as CDs in order to vary and better the rate of return.
  • Lock-in Definition,
    • A lender's guarantee that the mortgage rate quoted will not change for a specific period. The borrower wants the lock to stay in effect until closing.
  • Prime Rate Definition,
    • The rate suggested by the Bank of Canada on which most banks base their prime mortgage lending rate.
  • Variable Rate Mortgage (VRM) Acronym, Very Important,
    • Home loan in which the interest rate is changed periodically based on a standard financial index. Also called an "Adjustable-rate Mortgage."
    A type of mortgage loan offered by brokers and lenders.
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