Mortgage Pre-Approval


A Mortgage pre-approval is the very first step in obtaining a mortgage. Getting pre-approved can help you find out:

  • How much lenders will approve you for, which will give you an idea what price range you qualify for purchasing a house,
  • An estimate of your monthly mortgage payments, and
  • What your mortgage rate will be for your first mortgage term.

When you get pre-approved for a mortgage it’s not a guarantee that you’ll get a loan for that exact amount, but it will show you the maximum you may get. You’ll also be able to secure a great mortgage rate offer ahead of time, and lock in that rate for 60 to 120 days depending on the lender to protect yourself from rate increase throughout the home search. If interest rates fall while you are locked in, the mortgage lender will honour the lower rate.

The mortgage pre-approval process is very important. It lends weight to your bid on a home, proving to sellers that you’re serious and ready to buy which will improve your chances when there is serious competition for the home you’re eyeing to purchase.

Follow these tips to make the pre-approval process hassle-free:

Are You Financially Ready

Before going to any lender or mortgage agent, evaluate your own financial situation first.  You would be in the best position to determine how much debt you can take on.

You’ll need to take into account many details:

  • Your total household income
  • Monthly expenses (car payments, bills, credit card payments)
  • ‘Planned expenses,’ which are any costs or payments that you know are on the horizon. For instance, you may be planning to have a baby soon so you will have to consider expenses related to having a baby as well as any adjustment that a maternity or paternity leave will have on your income.
  • You’ll also need money for closing costs, moving costs, ongoing maintenance costs
  • Your down payment – you’ll be required to purchase mortgage default insurance if your down payment is less than 20%.
  • You can get a good estimate of how much you can afford by using a mortgage affordability calculator.

Shop Around for a Great Pre-Approval Rate

Do your research and compare mortgage rates to ensure you get the best rate. Don’t limit yourself to local banks. There are many non bank mortgage lenders that can give you a great deal. Research several lenders and narrow it down to the best offer. If you’re not confident about doing all the negotiations on your own, use a mortgage agent who can negotiate on your behalf.

Even the smallest difference in percentage points can make a huge difference in your monthly payments and on the amount of interest you’ll pay over time. To see this clearly, just use our mortgage payment calculator, try changing interest rates in small amounts, and you’ll see the variance in numbers.

Gathering the Documents

Part of being prepared for the pre-approval process is making sure you have all the records you’ll need for lenders to verify your income, employment, assets and debts.

You should plan to bring the following:

  • Proof of identification and proof address – e.g. copies of driver’s licenses, copies of social security cards
  • Credit reports and scores
  • Proof of assets – Value of properties, automobiles, investments, and savings
  • Proof of income and employment (e.g. pay stub, employment letter, bank statement confirming direct deposit, investment statement)
  • If self-employed, the last 2 years Notice of Assessments from your Income Tax return
  • Monthly debt payments – Most recent statements for mortgages, personal loans, lines of credit, student loans, auto loans, and credit cards
  • Estimated value of your home
  • Housing expenses (e.g. property tax, annual condo fee, heating costs)
  • Financial information for your co-borrower, if applicable
  • Records of rent payments, divorce, bankruptcy and foreclosure, if applicable
  • Down payment confirmation – Some lenders will ask you to show the sources of the money you plan to use

Preparing all the paperwork can take about a week, depending on whether your lender will ask for additional documents if you’re self-employed or your income comes from several sources or if you need to get records from outside sources, like an attorney or certain local government services.

Don’t forget to keep these documents handy as you’ll need them again when applying for the mortgage loan.

We’ll shop the most competitive brokers, lenders and banks in Canada to bring you today’s lowest interest rates, free of charge!  It can be done within an hour if you have your documentation together. Get in touch now and let’s get started.