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Pre-Approvals – A Crash Course

February 8, 2016

As a potential home buyer, it’s a great idea to know what kind of mortgage you qualify for so you can focus on homes in that price range. This can save you a ton of time and effort, and simply give you a lot more confidence when your house shopping.


There are things you need to know about pre-approvals first though, so you have a better understanding of your available options. To start with, what can a pre-approval do for you?

As we said, the greatest benefit is having a much better idea of what you qualify for when home hunting
Most lenders will feature 90-120 day rate guarantees to protect you while you shop around
In the case of bidding on a property, pre-approvals can be a requirement since they make you appear more serious to realtors and sellers

Pre-approvals do all of this – for free. Your pre-approval won’t cost you a penny – it is just simply a first step towards a mortgage that is for your benefit.


There are a few things to keep in mind with pre-approvals however. You want to make sure that you are getting a full pre-approval and not just a pre-qualification, which is little more than an idea of what rates you can qualify for (see our past article here). It is disappointing if you are under the impression that you can afford a home with a great rate, only to find out after that you don’t actually qualify and cannot purchase the property! A proper pre-approval will require you to submit documentation that confirms your qualification (such as a letter of employment, T4s, and so on). With this on hand, a lender can guarantee a rate for that 90-120 days, rather than just provide a rate hold, which is subject to later full confirmation.

Also, keep in mind that your actions after you obtain a pre-approval can affect your qualifications when actually applying for a mortgage. Actions such as missing credit payments, adding debt, or changing jobs really affects what you qualify for, since you have changed the playing field for the lender. By keeping things the same as when you obtained your pre-approval, when lenders double-check your qualifications upon full application, you can be more certain you will get your rate.

Lastly, the biggest point to keep in mind is that pre-approvals do not come with the best rates. These rates are typically marked up by lenders – so if you hear about a great rate, but find your pre-approval comes in higher, don’t be surprised. But this doesn’t mean that you have to sign at this rate upon a full application. Use the pre-approval more of as a way to conservatively gauge how much you can afford to pay on a property. This way, if you don’t qualify for a lower rate later, you can guarantee that pre-approval rate.


As mortgage agents, we can take the hassle out of getting a pre-approval. With a number of great lenders (35+), we know pre-approvals backwards and forwards and can guide you through the entire process. And when it comes to applying for your mortgage, we can step in and find that better rate if its available.

Check out our free Toronto mortgage broker service.

If you have any questions about how any of this works, feel free to reach out to us at:

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