In an article published by Protégez-Vous, our mortgage broker Patrick Dumond shared his perspective on the adjustable-rate mortgage, a product that is still relatively unknown to the general public. Offered by certain financial institutions, this type of loan differs from fixed-rate or variable-rate options.
A lower rate in the first year
The principle of an adjustable-rate mortgage is simple: the interest rate is set for a 12-month period and then reviewed each year over a five-year term. Unlike a variable rate, which can change at any time, this rate is predictable for one year at a time.
The initial rate is based on the institution’s one-year fixed mortgage rate, typically reduced by a slight discount, making it often more advantageous in the first year. This saving can help buyers better absorb the many expenses associated with purchasing a property, such as notary fees, renovations, or furniture purchases.
A choice that depends on your situation
While this option can provide some breathing room at the beginning, the following years may end up costing more. As Patrick Dumond points out, this makes it a niche solution, useful in certain situations—but not for everyone.
This type of mortgage may suit some buyers who want to lower their payments at the start of their loan. However, for those seeking stability, it is important to carefully weigh the risks, especially if interest rates remain high.
The importance of staying well informed
Every profile is different. Before making a decision, it’s best to compare several types of loans and understand their implications. As Patrick Dumond points out, some options also offer greater flexibility, such as variable rates that can be converted into fixed rates, or longer amortization periods.
Working with a Multi-Prêts mortgage broker means benefiting from advice tailored to your situation. Our experts are there to help you gain clarity among the various solutions, including those that are less commonly discussed.