Given that rates are low, hedgers are asking if they can lock in rates for a time period longer than their loan. Can a borrower do a swap longer than the loan commitment?
This is typically an out of policy request, but if the lender's credit committee may be comfortable in approving this arrangement as there are scenarios where this can make sense
The most common way of providing, say, a 5-year swap on a 3-year loan, is to include a mandatory termination in the swap confirmation based on your lender not extending the loan at the end of the third year and hence being unsecured in the swap for it remaining two years.
Your lender in most cases will have this clause in its swap documentation anyway, so the real deciding point here is the bank's credit committee’s comfort.