Converting Your Variable Rate into a Fixed Rate

March 29, 2022

Key points:

  • Variable rate mortgages have a conversion feature that allows you to convert your variable rate into a fixed rate at any point during your mortgage term
  • Your current variable rate doesn’t become your fixed rate. Lenders will offer you the fixed rate available, but it won’t be the same rate. 

Converting your variable rate

Variable rate mortgages come with a conversion feature that allows borrowers to convert their variable rate into a fixed rate at any point. While fixed rates can have their benefits, there are some important points to consider before making this change. Today, I chat about the need-to-know basics for this converting your variable rate.


Don’t feel like watching? Find the full transcript below!

Chris: [00:00:00] In this video, we’re going to discuss exactly what happens when you convert your variable rate mortgage into a fixed rate mortgage.

The variable rate conversion feature

Chris: [00:00:18] So one of my favorite features of a variable or adjustable rate mortgage is the conversion feature. And what that means is that at any time during the five year term of your mortgage, you have the ability to pick up the phone, call your lender, and ask them to convert your adjustable variable rate mortgage into a fixed rate. This is a fantastic feature of these mortgages because it allows you to choose and pick when to lock in to that long term rate. If we’re worried about rising rates, it’s possible to lock in. Also, if the rate offering today isn’t great and you expect interest rates to come down in the future, you can time things out, stick it out with a variable and lock into a lower fixed rate in the future.

3 points to note before converting

Chris: [00:01:11] So a couple of need-to-know details about what it takes to lock in. First of all, is there a cost associated with it? The answer is no. So your mortgage has this feature built in. The lender does not charge any admin fees or extra costs to make this change. The second thing to note is that locking in doesn’t mean that you are locking into your current effective interest rate in your variable rate mortgage, which is a common misconception. Sometimes people think, Well, my variable is 1.7% today. I want to lock in that rate. Now, it doesn’t work that way. The way it works is that the you have to call your lender and they will offer you whatever is available for a fixed rate mortgage at that time. And depending on how the market is structured, fixed rate mortgages usually come at a premium versus a variable rate mortgage. So inevitably it means that you’re going to be taking a higher interest rate. The third thing to note is that when you lock into a new fixed rate term, your payments are likely going to increase. So you have to be prepared for that and try and determine whether it’s worthwhile to lock into a fixed or not.

Need more help or information?

Chris: [00:02:29] My name is Chris Molder. I’m a Toronto based mortgage broker. And if you are contemplating converting a variable rate mortgage into a fixed, I invite you to get in touch for some guidance. I’m happy to always chat. The door is always open. Until my next video. Bye for now.

Need to get in touch? Book a call directly via my calendar below, or get in touch with me here.


Christopher Molder

Mortgage Broker

Christopher is a mortgage broker based in Toronto, Canada. And a son of a broker too. He’s a second generation mortgage broker. Following in his father’s steps he joined the family mortgage business straight out of university.