A conversion rate is the interest rate offered to clients when switching from a variable or short-term fixed rate to a longer-term fixed mortgage. Conversion rates are typically not as competitive as rates offered to the new borrowers.
Cases when a conversion rate applies include:
- Converting from a variable to a fixed rate
- Switching from a convertible term to a fixed or variable term
- Switching from a line of credit to a fixed or variable term
Spy Tip: When converting your mortgage, always compare the cost of your lender’s conversion rate to the cost of the best rate you could get in the open market. Don’t forget to factor in your breakage penalty and switching costs.« Back to Glossary Index