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When And How To Get Mortgage Pre-Approval

When and How to Get Mortgage Pre-Approval

One of the most important things you need to do before you start house hunting is to get pre-approved for a mortgage. It provides a clear idea of what price range of homes you should be targeting to remain within your budget. This will save you time by limiting your search to only viable options. Getting pre-approved also makes you a much stronger purchaser and reassures sellers you are a serious buyer, which is especially important in multiple offer situations.

To get pre-approved, it’s a good idea to meet with not only your bank but a mortgage broker, too.


When you apply for a mortgage at a bank, you’re only offered the products available in-house. With a broker, you’ll have access to dozens of lenders. This will ensure you’re getting the best interest rate and mortgage term from your bank. Likewise, it may bring forth a better deal.

Your bank and/or broker will discuss your financing options, mortgage terms (usually six months to five years), amortization schedule (often up to 25 years), interest rates and types (fixed or variable), how much you qualify for and what your monthly payments will look like. They will review your down payment, income, debts, regular expenditures and other key financial information like credit score. You’ll also need to pass a ‘stress test’ to prove you can afford payments at a qualifying interest rate that is typically higher than the actual rate being offered. Currently, the threshold, or minimum rate, to qualify for a mortgage is based on the Bank of Canada’s five-year benchmark posted mortgage rate.

Once pre-approved, the lender will give you a commitment letter that states it is willing to loan you the mortgage money (subject to conditions). It is usually valid for 90 to 120 days, and protects you against interest rate increases while you shop for a home. If rates go down, you will get the better rate.

However, the commitment letter is not a guarantee of final approval for a mortgage. Once you have found the right home, you will be required to provide your chosen lender with:

  • A copy of the real estate listing of the property
  • A copy of the offer to purchase or building contract
  • Documents to confirm employment, income and previous year’s income tax assessments

The property will then need to be appraised to ensure the price and condition of the home are acceptable to your lender.