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Pegasus Mortgage Lending Center Inc.

Mortgage Rate Lock vs Float Down in Canada: 2026 Guide

This article is for informational purposes only and does not constitute financial advice. Speak with a licensed mortgage professional before making any mortgage decisions.

Quick answer: rate lock vs float down

Quick Answer

In Canada, a mortgage rate lock (also called a rate hold) typically secures your quoted rate for 90 to 120 days while you shop or close. A float-down is a separate lender option that lets you take a lower rate if market rates drop before your mortgage funds. Most Big 5 banks offer rate holds but do not advertise formal float-downs, while many broker-channel lenders will reprice to a lower rate under defined conditions. Whether to lock now or wait depends on your closing date, how much rates could realistically move, and whether your lender permits a float-down.

Why timing your mortgage rate feels impossible right now

If you have ever stared at a rate quote and wondered whether to sign today or wait another week, you are not alone. Canadian buyers and renewers in 2026 are navigating a rate environment that moves on Bank of Canada decisions, bond-yield shifts, and lender-by-lender repricing, often in the same month. The anxiety is real, and it costs people real money either way.

The good news is that two tools exist to take the guesswork out of the decision. A rate lock holds your quoted rate for a defined window, and a float-down lets you capture a lower rate if the market drops before you close. Neither tool is magic, but understanding how both work, and which lenders offer them, is the difference between a confident decision and a six-figure gamble. This is where an independent broker — one who can work with 50+ Canadian lenders — earns their place.

120 Days — longest standard rate hold
50+ Lenders Pegasus shops for every file
$0 Typical cost of a rate hold to the borrower
20+ Years of Pegasus broker experience

Quick start: pick your path

Not every reader needs every section. Use the fork below to jump to the part of this guide that fits your situation.
First-time buyer

Start with the rate-lock definition, then read the step-by-step roadmap. Get an Instant Pre-Approval certificate before you commit.

Signed purchase agreement

Jump to the side-by-side comparison, then the Common Mistakes section before your closing date arrives.

Renewing a mortgage

Read the renewing subsection, then the FAQ. Switching lenders at renewal often unlocks a better float-down.

Pre-construction

Focus on the 120-day hold discussion and the lender-type comparison for long-close scenarios.

What a mortgage rate lock actually means in Canada

A mortgage rate lock, often called a rate hold, is a lender's written commitment to honour a specific mortgage rate for a set period — typically 90 or 120 days. If rates rise during that window, you still get your held rate. If rates fall, you may need a separate float-down clause to benefit.

In the Canadian market, rate holds are offered on both fixed and variable products, and the standard hold windows are 90 and 120 days. A smaller number of lenders will extend holds to 130 days for pre-construction purchases. The hold begins the day the lender formally issues it, which is usually at the point of pre-approval or commitment.

It is worth defining two terms that often get confused. A pre-approval is a lender's early estimate of what you qualify for, and the rate attached to a pre-approval is typically what gets "held." A commitment letter, by contrast, is the firm offer the lender issues once your file is fully underwritten. Both can carry a rate hold, but the commitment is the binding document. For precise terminology, the Pegasus mortgage glossary is a useful reference.

A rate hold does not usually cost you anything as a borrower in Canada. Lenders provide them to attract and retain applicants in a competitive market, and brokers can often secure the longest holds without any out-of-pocket fee.

What a float-down is, and when lenders offer one

A float-down is a provision inside a mortgage commitment that allows the borrower to accept a lower rate if the lender's rates drop before the mortgage funds. Unlike a rate lock, which protects you from rate increases, a float-down lets you benefit from decreases — but it is not standard, and the conditions vary significantly by lender.

Float-downs are more common in the broker channel than at the Big 5 banks, where any repricing is typically handled informally and case-by-case. Monoline lenders — specialist mortgage lenders that do not take deposits — often publish defined float-down policies with specific rules. Those rules typically include one adjustment only, a cutoff date before funding, and a requirement that the new rate come from the same product family.

Because float-down policies are not uniform, this is the part of the mortgage conversation where an independent broker adds the most value. Razi Khan, Founder and Mortgage Broker at Pegasus, has spent more than 20 years comparing clauses like these across dozens of lenders — the practical knowledge of which lender will reprice, and under what conditions, is not something you can find on a bank's homepage.

Rate lock vs float down: side-by-side

A rate lock protects you against rate increases; a float-down protects you against missing a rate decrease. Many borrowers benefit most when both are in place — a long hold with a documented float-down clause.

The chart below shows the standard hold windows Canadian lenders offer. For context on current pricing, see today's current rate details.

Pegasus Mortgage Lending
Typical Mortgage Rate Hold Windows in Canada
How many days a Canadian lender will typically hold your quoted rate before closing.
Source: Pegasus internal lender matrix, Oct 2026. Figures typical and vary by lender. Pegasus Mortgage Lending Center Inc. FSRA Lic # 11479.

How lender type changes your options

Not all Canadian lenders treat rate holds and float-downs the same way. The Big 5 banks tend to offer standard 90 to 120-day holds but handle float-downs informally. Monoline lenders — the specialist mortgage companies that reach consumers primarily through brokers — are often more structured, with written float-down rules you can plan around.

Credit unions sit in the middle, with policies that vary by province and institution. Alternative lenders, which serve self-employed and credit-challenged borrowers, typically offer shorter holds and rarely include a float-down because their rates already reflect a higher-risk calculation. This spread is exactly why Canadians benefit from a broker.

Pegasus Mortgage Lending
Rate-Hold & Float-Down by Lender Type
Typical hold length (days) and whether a formal float-down clause is commonly offered.
Source: Pegasus internal lender guides, Oct 2026. Policies vary by lender. Pegasus Mortgage Lending Center Inc. FSRA Lic # 11479.

Should you lock now or wait? A step-by-step roadmap

Use the following six steps in order. Each one narrows the decision, and by the final step you will know whether to lock, lock with a float-down, or wait.
  1. 1
    Define your closing window.A 45-day close and a 120-day close call for different hold lengths. If your closing date is more than 90 days out, you likely need a 120-day hold.
  2. 2
    Check Bank of Canada direction.Look at the current overnight rate and the next scheduled decision date. You are not forecasting; you are mapping the realistic range of movement before your close.
  3. 3
    Ask for the float-down policy in writing.If a float-down is offered, you need to know the trigger threshold, the cutoff date, and whether it is a one-time adjustment.
  4. 4
    Run both scenarios on a payment calculator.Use the Pegasus mortgage payment calculator to see what a 0.25% difference looks like in dollars over your term.
  5. 5
    Pick your hold length.Err on the side of a longer hold if your closing date can shift. A hold you don't need costs nothing; a hold that expires can cost you the quoted rate.
  6. 6
    Document the clause.Whatever you agree to — hold length, float-down trigger, adjustment window — should appear in the commitment letter. When you are ready, start your mortgage application.
Pegasus Mortgage Lending
What Drives the Lock-or-Wait Decision
Relative weight of the three factors Pegasus brokers evaluate before advising.
Source: Pegasus editorial, based on broker file review. Pegasus Mortgage Lending Center Inc. FSRA Lic # 11479.

If you are renewing a mortgage

Rate holds for renewals often start earlier than purchases — many Canadian lenders will issue a hold up to 120 days before your renewal date, which gives you a built-in window to shop. If you switch lenders at renewal, the hold is reset by the new lender, and that is often where a better float-down policy enters the picture.

Common mistakes that cost Canadian borrowers money

The following patterns show up again and again in Pegasus client files. First-time buyers may find the first-time home buyer guide useful alongside this list.

  • Assuming a rate lock covers you if rates drop. A lock protects against increases. Without a float-down clause, a lower market rate does not automatically transfer to your mortgage.
  • Letting the hold expire quietly. If your closing slips past the hold window, your lender typically reprices to current market rates.
  • Not asking for the float-down clause in writing. A conversation with a branch representative is not a binding term. The clause must be in the commitment letter.
  • Choosing too long a hold to feel safe. Some long-dated holds carry a slightly higher rate. The right hold matches your realistic closing window.
  • Comparing only the headline rate. A rate quoted without a float-down policy or with a short hold is not comparable to one quoted with both.
  • Switching lenders mid-close for a 0.05% improvement. The cost of restarting underwriting often outweighs the savings.
  • Treating pre-approval as a commitment. A pre-approval holds a rate but does not guarantee funding.
Pegasus Mortgage Lending
Interest Paid Over 5-Year Term: Locked vs Floated Rate
Illustrative impact on a $500,000 mortgage if a float-down captures a 0.25% rate drop.
Illustrative scenario only; not a rate quote. $500,000 principal, 25-year amortization, 5-year term, 0.25% reduction via float-down. Pegasus Mortgage Lending Center Inc. FSRA Lic # 11479.

Frequently asked questions

What is a mortgage rate lock in Canada?

A mortgage rate lock, also called a rate hold, is a written commitment from a lender to honour a specific mortgage rate for a set period. In Canada, the standard windows are 90 or 120 days, and the hold typically begins when the lender issues your pre-approval or commitment. The lock protects you if rates rise during that period.

How long can a mortgage rate hold last?

Most Canadian lenders offer 90-day or 120-day rate holds. A smaller number will extend to 130 days, usually for pre-construction purchases. If your closing date is likely to slip, request the longer hold from the start — the longer window typically costs nothing and prevents a repricing if your file moves slowly.

What is a float-down on a mortgage?

A float-down is a clause in a mortgage commitment that lets the borrower accept a lower rate if the lender's rates drop before funding. It is separate from the rate lock, which only protects against rate increases. Float-down policies vary — some lenders allow one adjustment, others require specific triggers.

Can I get a lower rate if rates drop after I lock in?

Only if your commitment includes a float-down clause. A standard rate lock in Canada does not entitle you to a lower rate automatically. Ask your lender or broker whether a float-down is available, what the trigger is, and by what date before closing the adjustment must be requested. The answer should be in writing.

Do Canadian banks offer float-down mortgages?

The Big 5 banks typically do not advertise formal float-down policies, but may reprice on a case-by-case basis depending on the branch and the borrower's relationship. Many broker-channel lenders, particularly monolines, publish defined float-down rules. This is often where working with an independent broker produces a measurably better outcome.

Does a rate lock cost me anything?

For most prime borrowers in Canada, a rate hold is free. Lenders use it as a competitive tool to attract applicants. A small number of lenders charge for the longest holds on specialty products, but the standard 90 or 120-day hold typically has no out-of-pocket cost to the borrower.

What happens if my rate hold expires before closing?

If the hold expires, the lender typically reprices your mortgage to current market rates. If rates have risen, your payment goes up. If rates have fallen, you may benefit — but you lose the certainty you had planned around. The fix is to monitor the hold expiry date and request an extension early if your closing is slipping.

Can I switch lenders if rates drop after my pre-approval?

Yes, but weigh the cost. Switching lenders mid-process may mean restarting underwriting, re-ordering the appraisal, and in some cases delaying your closing. A broker can usually compare your current commitment against the new offer and tell you whether the rate improvement is worth the disruption. For Quebec borrowers, note that mortgage closings require notarial signing, which can affect timelines. Our FAQ library covers more scenarios.

Not sure whether to lock or wait?

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This article is for informational purposes only and does not constitute financial advice. Speak with a licensed mortgage professional before making any mortgage decisions. Pegasus Mortgage Lending Center Inc., FSRA Lic # 11479.
Razi Khan — Founder, CEO and Mortgage Broker at Pegasus Mortgage Lending

About the author

Razi Khan

Founder, CEO & Licensed Mortgage Broker · Pegasus Mortgage Lending · Toronto, Ontario · FSRA Lic # 11479

Razi Khan is the Founder, CEO, and a licensed Mortgage Broker at Pegasus Mortgage Lending Center Inc., based in Toronto. With over 20 years of experience in the Canadian mortgage industry, Razi has personally guided more than 3,000 clients through some of the most complex and high-stakes financial decisions of their lives — from first-time purchases in the GTA to refinancing strategies, alternative lending solutions, and cross-border mortgages for Canadians buying in the United States.

Razi founded Pegasus in October 2008, launching the brokerage at the height of a global financial crisis. He works across the full spectrum of borrower profiles, with particular expertise in complex files including self-employed borrowers, credit-challenged clients, and investors building multi-property portfolios.

Sources & References

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