Process and paperwork
Pre-approval
A lender's underwritten opinion of how much it will lend you, with a rate held for 90 to 120 days but no commitment to lend.
A pre-approval is a full application: income documented, credit pulled, down payment verified, and a lender's considered opinion attached to a rate hold. A pre-qualification is different. It's a conversation, with nothing verified.
The lender holds the rate for the hold period. It doesn't promise the mortgage. The pre-approval still depends on nothing important changing in your situation, and on the lender accepting the property you eventually buy.
That second condition catches people. The lender has approved you, not the house. A condo with a thin reserve fund, an acreage with a shared well, or an unpermitted basement suite can all lead to a decline after a pre-approval.
Keep a financing condition in your offer unless you've had specific advice on your own file.
Related terms
Qualifying rate
The rate lenders test you at: the greater of your contract rate plus 2 percentage points, or 5.25%.
Rate hold
A lender's commitment to honour today's rate for a set period, usually up to 120 days, at no cost and with no obligation.
Appraisal
A lender-ordered opinion of a property's market value, used to confirm the loan-to-value ratio before funding.
This definition describes how the term is used in Canadian residential mortgage lending. It’s general information, not advice on your file. Rules, thresholds and rates change. Where a figure is quoted, it’s current as of the date shown on the related guide.
Sharp rates. The full picture.
Ask Daniel about this term
Daniel De Sousa, Mortgage Associate, can walk you through it before you sign anything. Or get a rate quote: 6 questions, about two minutes, and no credit check to start.
No credit check, and no commitment.