DCHP-3

convertible mortgage

DCHP-2 (Aug 2012)
n. — Finance, Administration

a mortgage that starts out as a closed mortgage with the option to extend its maturity date without penalty.

Type: 5. Frequency — Convertible mortgage is used more frequently in Canada than in the US (see Chart 1). This meaning of convertible is quite similar to the meaning reported in the OED-3, s.v. "convertible" (3b) relating to bonds, loan stock and the like 'that can be converted into other shares [...] on a preferred basis, typically within or at a predetermined time'. The meaning relating to mortgages seems to be an extension of the established meaning, which goes back to the mid-1800s relating to bonds (see, e.g., the 1873 quotation). Note, however, that the convertible period is not generally very long (see the 2015 quotation).
See also COD-2, s.v. "convertible" (4), which is marked "Cdn".

Quotations

1873
NOTICE is hereby given that the St. Lawrence and Ottawa Railway Company will apply to the Parliament of Canada at the next Session thereof, for an Act authorising the calling in and cancellation of the second mortgage or security existing on the said Railway and of the 7 p. cent convertible mortgage bonds thereunder issued [...]
1918
This issue of 7% Convertible Mortgage Debenture Stock is secured by Deed of Trust in favor of the Montreal Trust Company as Trustee, and constitutes a direct mortgage and charge on the present and future fixed assets of the Company [...]
1927
The moderate buying in evidence was largely concentrated in high-grade railroad and public utility liens with some interest in convertible mortgages reflecting the day's recovery in stock quotations.
1965
A $1,000,000 6 per cent convertible mortgage sinking fund bond issue would be made, of which half would be issued as partial payment for the $1,026,700 outstanding 6 per cent general mortgage bonds of James Equipment Ltd.[...]
1990
Also on Tuesday, Sun Life Trust Co. announced it has introduced a special residential mortgage rate of 12.9 per cent on one- to five-year closed mortgages and a six-month convertible rate of 12.75 per cent.
2003
TD Canada Trust raised mortgage rates by a quarter of a percentage point on all of its mortgages, from its short-term six-month convertible mortgage to its longest-term 10-year closed mortgage.
2015
Convertible mortgages are really fixed rate mortgages that have a term of six months or a year. Not every lending institution offers these. They allow you to lock into a longer term during the current term of your mortgage without penalty, but only with your original lender.

References

Images

Chart 1: Internet Domain Search, 10 Sep. 2012

Chart 1: Internet Domain Search, 10 Sep. 2012