Mortgage Pre-Approval


1. Know what you can afford.

If you are looking for a new home, be sure you are pre-approved. With a mortgage pre-approval, a licensed mortgage professional can do a more complete verification prior to sending you shopping for a home, and with that done, the dollar figure you are going shopping with is actually what you can spend.

2. Lock in your interest rate for 60 – 120 days.

The mortgage professional that you work with to get pre-approved will let you know for certain what you can afford based on lender and insurer criteria, and what your payments on a specific mortgage will be. Mortgage professionals can lock-in an interest rate for you for anywhere from 60 – 120 days while you shop for your perfect home. By locking in an interest rate, you are guaranteed to get a mortgage for at least that rate or better. If interest rates drop, your locked-in rate will drop as well. However, if the interest rates go up, your locked-in interest rate will not, ensuring you get the best rate throughout the mortgage pre-approval process.

3. Be in a better position that other buyers that are not pre-approved.

In order to get pre-approved for a mortgage, a mortgage professional requires a short list of information that will allow them to determine your buying power. A mortgage professional will explain to you the benefits of shorter or longer mortgage terms, the latest programs available, which mortgage products they believe will most likely meet your needs the best, plus they will review all of the other costs involved with purchasing a home.

4. If interest rates drop, your locked-in rate will drop as well.

Getting pre-approved for a mortgage is something every potential home buyer should do before going shopping for a new home. A pre-approval will give you the confidence of knowing that financing is available, and it can put you in a very positive negotiation position against other home buyers who aren’t pre-approved.

What do you need?

Proof of Income

Have your employer give you a letter of employment on company letterhead outlining your name, position, gross annual income, and number of years employed with the company. A recent pay stub, the most recent Notice of Assessment (NOA) or most recent T4 will be acceptable. If you are self-employed, you may need three years financial statements, and tax returns (together with official assessment from Revenue Canada).

Account Information

Social Insurance Numbers and banking information (i.e. institutions name, address, type of accounts, account numbers).

Assets and Liabilities

Know your assets and their value (i.e. cash amounts, stocks, bonds, RRSPs, car). Know your liabilities (i.e. car loan, credit card balances).