Hold up, hold up – did someone say Rate Hold?

Let’s maybe back up a bit. So we’ve all heard or have been hearing about interest rates for almost a year now. Is it surprising the Bank of Canada increased interest rates, probably not but that doesn’t mean there aren’t a few things you can do to set yourself up during the mortgage process and avoid any confusion around what’s your rate? and what is your rate going to be?

First things first, let’s break down what a “rate hold” is. This is the length of time a lender will lock in your quoted rate. Think of it as a guarantee of that rate for a set period (assuming you qualify for it). There are different time frames that lenders will hold rates and usually they range from 30, 45, 60, 90 or 120 days.

How does this help you, the homeowner? Well this can be beneficial for those who are in the process of searching for their dream home and want to ensure that the rate they are offered is not subject to any unexpected market changes.

I’m guessing you might be asking yourself, “how do I get my hands on a rate hold?” Well first, you are going to have to get pre-approved. This is when a couple of things happen. We will do a credit check, look at your income and your monthly operating expenses and see what you can afford. Then at this point we will be able to shop around and see what mortgage product best suits your needs. Once we have completed these steps we will talk about things like amortization (how long you want the loan for 15 years, 20 years?) and what term you want to commit to, like a 1 year, 3 year or 5 year term for example. Finally, we will see what lender is offering the best rate for your situation. That’s when we are going to lock in or get a rate hold. Here's the thing with rate holds. They only really apply for Fixed Rate mortgages since the nature of Variable Rates is to fluctuate.

So if you think you might be in the market for a new home this Spring or Summer, now is a great time to start getting your ducks in a row as they say and put a hold on the best rate possible.