If you are planning on purchasing a new home and are in need of a mortgage, the term “rate hold” or pre-approval is something you need to know about. This is offered by most lenders and should be presented to clients who are purchasing a new home. This would allow you to secure the interest rate on your mortgage application for a certain period of time, so you can have peace of mind knowing you are protected during that time period.
Generally, these holds range from 90 to 120 days and are available only to those looking to purchase a home or clients who wish to establish a new mortgage. If you qualify for this option, your application will be submitted to a lender who is offering a rate hold on an interest rate that is advantageous to you, and this can be done without a property attached. This means you would receive the fixed interest rate that was available on the date of your application submission, even if that interest rate were to increase. Again, this would only be for a specific period of time, so as long as your mortgage closes within that period, you would be protected and would be able to keep that lower rate that was previously discussed.
The purpose of this offer is to allow clients to take advantage of lower interest rates, so prospective buyers would benefit greatly from a rate hold, which would work in their favour. What’s great about this option is that it does not commit you to working with that particular lending institution, nor does it hurt your chances of receiving an approval in the future. All that a rate hold will do is protect the interest rate that was agreed upon while you look through the market, so you can do this comfortably without the added stress of increased rates you may otherwise encounter. You would have the freedom to shop the market and to look for your dream home without worrying about a rate increase because a rate hold will protect the lower rate for you.
Additionally, once the expiry date arrives, you can try submitting another rate hold if you have not yet found your perfect home or wish to take advantage of different interest rates. There is nothing stopping you from doing this, and the only thing you’ll have to understand is that the rate hold will be subject to the current rates on the day of your new submission.
Putting a rate hold in place is always a good idea, and the experts at Mortgage Makers can provide you with more information. Our mortgage brokers always provide clients with the best rates and services, so if you are looking for a second home mortgage or want to work with the best mortgage brokers in Edmonton, contact us today!