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Hybrid Mortgages

A hybrid mortgage is a type of mortgage that combines features of both fixed-rate and adjustable-rate mortgages (ARMs). In Ontario, hybrid mortgages are typically offered by banks and other financial institutions as a way for borrowers to take advantage of the stability of a fixed-rate mortgage while also having the option to adjust their mortgage rate in the future.

Hybrid mortgages typically have a fixed interest rate for a certain period of time, after which the rate becomes adjustable and may change based on market conditions. The fixed period may last for three, five, seven, or ten years, depending on the terms of the mortgage. After the fixed period ends, the borrower's mortgage rate will be adjusted based on an index, such as the prime rate, and may change periodically according to the terms of the mortgage.

Hybrid mortgages may be suitable for borrowers who want the stability of a fixed-rate mortgage but are also interested in the potential for lower payments in the future. However, it's important for borrowers to be aware that their mortgage payments may increase if interest rates rise after the fixed period ends.

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