The Scotland full-back’s contract expires in May but a knee injury sustained against Kilmarnock at the end of last year has sidelined him for six months. He didn’t sign a pre-contract with another club in January and won’t play again before the next transfer window.
But Hearts head coach Cathro said: “Callum has been very honest in his dialogue with the club, even a long time before I became involved.
“It’s a horrible situation for him. It was a moment where most likely the offer was going to be there for him to take that next challenge in his career. That’s what he wants to do. I respect that.
“He will be a Hearts player until the point where he has fully recovered.”
Hearts will still be entitled to a significant development fee when Paterson moves on. Cathro added: “He cares a lot about the people here and to a massive degree for this club. There’s nothing but understanding and respect from both sides. He’s a guy I have a hell of a lot of time for and will support. We will just manage the situation as best we can.”