There are many things to consider when looking at making a choice to have a hybrid or split mortgage. The below noted article article touches on a few items only but there are other pros and cons as well.
Although on the upside it may reduce your overall rate risk depending on the product you are in, it may be difficult to easily transfer your mortgage at the time of renewal via an easy switch. Most mortgage transfers or switches from one lender to another at maturity can be easily done with only the proper documentation signed from the new lender. Let’s suppose that you take out a split mortgage that has a fixed portion and another that has a variable line of credit portion. In this case the line of credit portion is usually registered very differently from the fixed rate portion. What does that mean to you? A simple transfer is not possible, you may run the risk of having to go to a lawyer and pay not only legal fees but an appraisal fee as well. I have seen this happen with clients that have come to me and have been very upset that this nuance was not disclosed by their bank prior to them signing on the dotted line.
This article fails to outline more items I discussed regarding the cons and has focused heavily on the positives. Not a great slant for the consumer who wishes to know all the risks involved. It doesn’t surprise me that they also quoted a bank employee who raves about these products -as a matter of fact banks love these products and push to convince consumers to buy in as it is a big cash cow for them as opposed to some other products.
Bottom line is buyer beware, know all the facts about hybrid or split mortgages prior to committing to one and make sure you are fully aware of the differences from one lender to the next. It may or may not be the perfect product for you and your best bet would be to draw on the expertise of a Mortgage Broker to provide you with all options. Also, feel free to contact me directly for guidance with your mortgage.
Kim Gibbons, ” Your Mortgage Superhero ®”
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