COMBINATION MORTGAGE

What is a Combination Home Loan? A combination home mortgage loan essentially allows a borrower to choose both a fixed interest rate and a variable interest rate on the same home loan.

Traditionally, a borrower had to choose one or the other; at least until the end of the mortgage term. Fixed interest rate mortgages provide a sense of "comfort" for many mortgage holders - that is to say, that the mortgage payment is constant over the term of the mortgage. No surprises, no watching and worrying about what "the market is doing." Variable interest rates can provide a substantial saving on the amount of interest paid over the life of a mortgage, but is not necessarily for the "faint of heart."

Enter the combination mortgage! Mortgage borrowers now have the option to combine both interest rates on the same loan. For example, a $150,000 mortgage can now be split into $100,000 at a fixed rate, and $50,000 at a variable rate. Or $75,000 and $75,000 etc. You may be asking yourself, why would someone want to do that? I suppose the short answer is, it's a bit like "hedging a bet." When interest rates are low, the borrower is taking advantage of this on the "variable interest rate side." When rates are higher, the borrower is taking advantage of being locked in at a lower rate on the "fixed interest rate side."

Is this the kind of home mortgage loan for you? You should seek some professional advice on that question. Every situation is different. Your overall objective should be to pay off your home mortgage as soon as possible, and pay the least amount of interest possible while doing it.