Rate hold
A lender's promise to honour a specific rate for a set period while you shop or wait to close, commonly 90 to 120 days (FCAC notes 60 to 130 days, depending on the lender). If rates rise, you keep the held rate; if they fall, many lenders will give you the lower rate.
A rate hold is free protection against rising rates. Lock a rate at pre-approval, and if the market climbs during your search you still get the held rate, provided you close within the window and the final approval goes through.
It's tied to that lender and product, and to your file as submitted. If you switch lenders, your closing date falls after the hold expires, or your application changes materially, you're priced at that lender's rate at the time. A rate hold is not an approval.
Many lenders also allow a hold before a renewal or switch (often up to about 120 days before maturity; this is lender policy, not a federal rule). Ask how the hold handles a rate drop before relying on it.
Worked example
Illustrative: you hold 4.20% on a $500,000 mortgage (25-year amortization). Before closing, the lender's rate for the same product rises to 4.45%.
Payment at the held rate: about $2,685/month; at 4.45%: about $2,753/month. The hold saves roughly $69 a month, or about $4,100 over a five-year term.
Illustrative figures only, rounded; not a quote or current rate. See today’s rates on our live board.
Sources
- Getting a mortgage preapproval (Financial Consumer Agency of Canada)
Ask Maya about Rate hold
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