Definition
A hybrid (or "combination") mortgage splits the balance into two portions — one fixed-rate, one variable-rate. The proportions are negotiable (50/50, 70/30, 60/40) and each portion may have a different term.
The goal is to spread interest-rate risk: the fixed portion secures part of your payments against hikes, the variable portion captures potential cuts. The monthly payment combines both rates weighted by their share of the balance.
Complexity to watch for: the breakage penalty can combine IRD (on the fixed portion) and 3 months of interest (on the variable portion), making the simulation longer. Also, if the two portions end on different dates, you face two potentially staggered renewals. Always request, in writing, the penalty grid for both portions before signing.