A “conversion rate” is the interest rate your lender offers you when converting from a variable or convertible mortgage to a fixed mortgage of a longer term.
Generally, the new fixed mortgage must be for at least 3-5 years.
Conversion rates are rarely as good as the fixed rates lenders offer on new business. Usually, conversion rates are one of the following:
- A set amount below posted rates
- A negotiated rate at the time of conversion
- A pre-defined discounted rate
- The lender’s “broker rate.”
Broker rates are typically the lowest of the above options but it depends on the lender.
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