When constructing a convertible mortgage,the lender will require a contract interest rate equal to or greater than the market rate on a similar mortgage without a conversion option.

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A convertible mortgage often has a lower initial interest rate compared to similar non-convertible mortgages because the conversion option is valuable to borrowers, allowing them to convert to a fixed rate if interest rates rise.

When Constructing a Convertible Mortgage,the Lender Will Require a Contract