A Toronto based Company puts out a book of all the mortgages that will come due in the next couple of months. We buy that book monthly and solicit these Consumers to make sure that they are getting the best mortgage terms available. In our search, we are finding more and more that Consumers these days are being encouraged by their present Lenders to go short term (ie 6 months) and to take a "convertible" product.

A Convertible mortgage allows the Consumer to choose a short term mortgage now (at a low rate) and convert it to a longer term when you feel rates have bottomed out, usually with no penalty. The "no penalty" is my matter of concern. It should state that this mortgage is only "open" for conversion with the same Lender. Most of the Consumers interviewed over the last eight months have been under the impression that they can leave their present lending institution at the end of the initial period (normally six months). That is simply not true.

Lending institutions know that you can assign your maturing mortgage to a new lender, normally without cost. In other words, you can give your mortgage to any lending institution that is willing to accept it, when it comes due (maturity date). They (the Lenders) had to figure out a way to keep your business. The answer was the convertible mortgage.

Don't get me wrong, if your Lending Institution will allow you to

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switch or convert your mortgage to an "open" product, they are Consumer oriented. There is nothing wrong with their Convertible Mortgage. In most cases however, this is not the case.

This writer objects to the fact that the Consumer is being robbed of his/her opportunity to choose the Lending Institution that offers the best long term rates.

Consumers, seek professional advice before you choose to renew with your present Lender's CONVERTIBLE PRODUCT! If you are required to stay with them when you elect to lock in to a longer term, you may be missing out on better long term rates elsewhere.