Rate Holds & Rate Locks

A rate hold is free insurance against rates rising while you decide. It costs nothing, it does not commit you to anything, and most people who could have one do not — usually because nobody told them to ask before they started looking.

What a rate hold actually gives you

When a lender holds a rate for you, it guarantees that rate for a set period — commonly 90 to 120 days, sometimes longer at renewal. Within that window:

• If rates rise, you keep the rate you were given. That is the whole point.
• If rates fall, you almost always get the lower one. Most lenders will reprice to their current offering before closing. It is not universal, so it is worth confirming which lender you are with.
• You are not committed. A hold is not a contract to borrow. You can walk away, or take a different lender entirely.

The asymmetry is the reason to have one: you gain if rates rise and lose nothing if they fall.

A hold is not an approval

This catches people out, so it is worth being blunt about. A rate hold secures a number. It does not promise the lender will fund your mortgage. The approval still depends on:

• The property — its value, condition and type, none of which the lender has seen yet
• Your file still being true at closing: same job, same income, same debts
• Final document review, which is where self-employed and commission income usually gets its real test

A hold attached to a properly worked-up application is worth a great deal. A rate quoted over the phone with no application behind it is worth very little, whatever it is called.

Holding a rate before a renewal

Most lenders will hold a rate up to 120 days before your maturity date, and so will the lender you might move to. That four-month window is the most valuable one in a mortgage, and it is the one most people sleep through — the renewal letter arrives, the date approaches, and signing it becomes the path of least resistance.

Four months out, with a hold in hand from somewhere else, the conversation with your current lender is a different conversation. See our guide to renewals.

Locking a variable rate into a fixed

Different thing, same word, and it is worth separating them.

Most variable-rate mortgages let you convert to a fixed rate at any time without penalty. The catch is in what rate you get: the lender's current fixed rate for a term at least as long as the one you have left — not the rate you could have had when you signed, and not necessarily a competitive rate, because the lender knows you cannot easily leave mid-term.

When people ask whether to lock, they usually want a forecast. Nobody has one. The question that can actually be answered is this:

If the payment rose by another few hundred dollars a month, would that be uncomfortable, or would it be a problem?

If it would be a problem, the certainty is worth paying for and the timing matters less than you think. If it would merely be uncomfortable, a variable has historically rewarded people who sat still. That is a question about your own file, not about the Bank of Canada.

Common questions

Does a rate hold cost anything?

No. If someone asks you to pay for one, ask what exactly you are buying.

Can I hold a rate with more than one lender?

Yes, and through a broker that happens as a matter of course. It is one of the plainer advantages of not applying at a single branch.

Does a hold hurt my credit?

A mortgage application involves a credit check. Several mortgage enquiries within a short window are generally treated as one event by the scoring models, precisely because shopping for a mortgage is expected behaviour.

What happens when the hold expires and I have not bought?

Usually it is simply re-issued at the rates available then, with updated documents. Tell us before it lapses rather than after.

I was given a rate on the phone with no application. Is that a hold?

No. That is a quote. It becomes a hold when a lender has an application and agrees to stand behind the number.

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This page is general information, not financial advice. Hold periods, reprice policies and conversion terms vary by lender and change. Every file is different — speak with a licensed mortgage professional before making a decision. Pegasus Mortgage Lending Center Inc., Brokerage, FSRA Licence #11479.