Pre-approved Mortgages

Pre-approved mortgages allow borrowers to search for a home safe in the knowledge that they'll be able to receive a loan from a lender. It's a good idea for potential homeowners to seek out mortgage approval before finding a property to buy, as knowing how much money you can be certain to borrow will make the process much smoother.

What is a pre-approved mortgage?

A pre-approved mortgage is a home loan that has been tentatively agreed upon by a lender, outlining how much money you will receive for specific terms and a certain interest rate. While a pre-approved mortgage is not the same as a finalized agreement, it's usually an accurate depiction of the final product.

What are the benefits of pre-approved mortgages?

The most obvious benefit of mortgage approval is knowing how much money you can spend on a property. This will allow you to search for the right homes, instead of wasting time on properties outside of your price range. Pre-approval also allows you to calculate how much your monthly mortgage payments will be, giving you the chance to plan out your repayment and determine if it's financially prudent.

Having a pre-approved mortgage also gives borrowers more credibility with sellers. Showing that you are serious about purchasing a home, and that you have the financial capability, will give home sellers peace of mind, and can lead to more negotiating power on your end.

In addition, a pre-approved mortgage gives borrowers the opportunity to lock in a specific interest rate. Most pre-approved mortgages are only valid for between 90 and 120 days, meaning that if a borrower chooses a fixed-rate mortgage, they can count on that rate for the entirety of their loan.

What types of pre-approved mortgages are there?

Pre-approved mortgages can come in many forms. These include residential mortgages, conventional mortgages, variable rate mortgages, fixed-rate mortgages, short-term mortgages, long-term mortgages and everything in between. It's important to speak with your lender about which type of mortgage best suits your needs before deciding on one.

How do I get a pre-approved mortgage?

When seeking mortgage approval, it's essential to gather the pertinent information for a lender to analyze. You'll want to provide the name of your employer, the length of your employment and your current salary, as well as annual salaries for your household. Income besides salaries is also important, meaning borrowers should provide information regarding commissions, bonuses, assets, investments and any other commodity that can add to your total net worth.

Lenders will also want to know about current financial responsibilities and liabilities, such as bills, child support, alimony, credit card debt, student loans, car loans and any other forms of payment obligations.

Contact CanEquity to speak with a mortgage professional who can walk you through the pre-approval process and help find a home loan that fits your needs. Keep in mind that minimum loan amounts are $100,000, with a minimum down payment of 5 percent and a maximum amortization period of 25 years. Also, all applicants must be purchasing property located in Canada.