Variable or fixed rate? Real estate video with Melissa Melo from Multiprêts
Find out what Mélissa Melo, mortgage specialist at Multiprêts, has to say about choosing between fixed and variable rates,
Video on fixed versus variable rates
Advice from an experienced mortgage broker
Transcription of the video chronicle :
Geneviève Langevin: Hello and welcome to my expert real estate columns. Today, we’re lucky enough to welcome a charming mortgage brokerage expert, Mélissa, from Multiprêts. Thank you, Mélissa, for joining us today.
Melissa Melo: Hi, thanks for inviting me!
Geneviève Langevin: Mélissa is going to enlighten us today on a subject that many customers ask me: should I opt for a variable or a fixed rate? With interest rates fluctuating so much lately, it’s a question that comes up a lot. So, Mélissa, what advice do you have for our readers?
Melissa Melo: Yes, indeed, that’s a recurring question, especially since the recent rate changes. It really depends on the customer’s situation. For example, for those who aren’t sure how long they’ll keep their property, or who plan to sell soon, a variable rate may be interesting. With a variable rate, the penalty is known in advance, and it’s usually the smallest penalty possible – three months’ interest.
Geneviève Langevin: Okay. But if it’s a first-time buyer who plans to keep the property for several years and is feeling a little insecure, what would you advise in that case?
Melissa Melo: In this case, I’d recommend a fixed rate. A fixed rate offers a degree of security for those who are not comfortable with market fluctuations.
Geneviève Langevin: What about fixed-rate penalties? How do they work?
Melissa Melo: For a fixed rate, penalties are often calculated on the basis of an interest differential. If the customer’s current rate is lower than the market rate, we talk about three months’ interest. However, if the customer’s rate is higher than the market rate, this is where penalties can be very high. It’s important to know what the market rate is, how much time is left on the mortgage, and the existing rate and term to calculate a penalty correctly.
Geneviève Langevin: And for those considering a real estate flip, with variable rates currently very high, would you still recommend a variable rate?
Melissa Melo: For investors looking to flip real estate, there are two things to consider. On the one hand, the penalty of a variable rate can be deducted as an expense on taxes, which can be interesting. On the other hand, if the person plans to buy a new property quickly, banks often allow the transfer of a fixed rate to a new property. However, this must be done fairly quickly, as customers generally have around 90 days to transfer their mortgage to a new property.
Geneviève Langevin: Thank you very much for these valuable tips, Mélissa! It will really help our readers better understand the differences between fixed and variable rates.
Melissa Melo: Thank you, Geneviève, for the invitation. It’s always a pleasure to share my mortgage knowledge.
Geneviève Langevin: Thank you once again for your valuable advice. Dear readers, keep following us for more real estate columns and advice. Until next time!
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