Combination mortgages on the rise

Combination mortgages on the rise

At a time when the rate debate is as heated as ever, combination (or "hybrid") mortgages - which allow borrowers to divide their mortgage loan into fixed and variable rates - are becoming a more common product choice.

"The combination mortgages are growing in popularity," Gary Siegle, regional manager at Invis in Calgary, said in a recent Globe and Mail forum. "That is because we have experienced a lot of economic uncertainty and very few people are comfortable about future trends. The combination allows you to hedge your bets."

The most recent example of a combination product is Merix Financial's 50/50 Wise Mortgage, which lets borrowers put half their mortgage into a five-year, fixed rate plan and the other half into a five-year, variable rate plan with the option to lock into a fixed rate at any time (something many borrowers in general are doing now that fixed rates are on the rise). The minimum credit score requirement is 620 and scores will determine the maximum LTV on the loan.

According to a recent study by CAAMP, five per cent of Canadian mortgage holders have combination mortgages compared to 28 per cent with variable-rate mortgages and 68 per cent with fixed-rate mortgages.