In simple words, a hybrid loan is a mortgage that combines features of both fixed-rate and adjustable-rate loans. Most of the time, the interest rate is fixed for an initial period, such as 5, 7, or 10 years. After that, it becomes variable and adjusts in a periodic manner for the remaining term. This loan structure appeals to borrowers who want stable payments initially but are comfortable with adjustments in the future. Hybrid loans may be advantageous for borrowers who plan to sell or refinance within the fixed-rate period, offering short-term stability with potential long-term savings.