What is a mortgage pre-approval?
Mortgage pre-approval is a process that allows you to:
- Know the maximum mortgage amount you are eligible for
- Estimate your monthly payments
- Lock in an interest rate for up to 12 months, depending on the lender
Lenders set the terms and criteria for each step. During this process, the lender determines your borrowing capacity by analyzing your finances.
Get a mortgage pre-approval online
To obtain a mortgage pre-approval, you must provide several documents proving your financial situation, residence, etc. These documents vary depending on your profile (salaried Quebecer, self-employed, newcomer, etc.).
However, before submitting your application, we invite you to make an appointment with one of our brokers to prepare your mortgage pre-approval application.
Where can I get a mortgage pre-approval?
You can get your mortgage pre-approval from the following players:
– A mortgage broker, which ensures that all possible options are considered)
– Directly with a lender, which limits your options and will not guarantee the best terms
Mortgage brokers
Benefits
The mortgage broker works with several lenders to find the most advantageous mortgage product adapted to your needs. In addition, many mortgage products are only available through a broker, such as products from direct banks (neo-banks), as well as alternative lenders or private lenders, if you ever want to obtain a mortgage with bad credit .
You do not pay the broker! They receive a commission from the lender once the deal is done, there are no hidden fees.
Disadvantages
A mortgage broker does not lend you money directly to finance your purchase. He or she arranges this transaction by finding you the most suitable lender.
Mortgage Lender
Benefits
The mortgage lender will offer youinterest rates and terms from their financial institution that differ from one lender to another.
Disadvantages
The major disadvantage of going directly through banks is that they will only offer you their own mortgage products. Not being a specialist, you may end up with a restrictive product, high penalties…
You can do yourmortgage shopping but alone! A mortgage broker will do the shopping for you and offer you several options based on your financial situation.
Documents required to obtain a mortgage pre-approval
- Proof of identity
- Employment certificate showing proof of current salary, position held, length of time employed
- Proof of your down payment
- Lessons on your assets
- Information on your debts
How do I get a mortgage pre-approval?
Contact our brokers
To complete your mortgage pre-approval application, you must first contact a mortgage broker.
We invite you to contact one of our brokers at (514) 447-3000 or by email at or in make an appointment here.
Apply for pre-approval by phone
To finalize your pre-approval application, our brokers will explain over the phone what documents you need to provide. The sooner you provide your information, the sooner you will receive a response to your application.
Get an answer instantly
Once you have submitted your documents, depending on the status of your file and your situation, you can get an answer almost immediately.
Make an offer on the property you are interested in
Once you have received your mortgage pre-approval, you can begin your search for your future property and place offers.
5 reasons to get pre-approved for a mortgage
1. Know your borrowing capacity
The mortgage pre-approval makes your purchase more concrete! It is during this pre-approval that you will know your mortgage capacity which will facilitate your choice of house to buy.
2. Calculate your down payment and know your monthly payments
By determining your borrowing capacity, you can more easily define your budget by planning the monthly payments needed to pay off your mortgage.
3. Freeze your mortgage rate if interest rates rise
You can freeze your mortgage rate for 90 days to avoid rate fluctuations. This way, you can safely choose your home without worrying about your interest rate going up.
4. Be considered a serious buyer
Getting pre-approved by a lender allows you to be considered a serious buyer. For both the seller and your broker, it is reassuring to know that you are pre-approved for a mortgage because it shows that you are financially sound and able to position yourself as a buyer if the property is suitable.
5. Be sure to get your mortgage on time and be able to buy your property
Having a mortgage pre-approval allows you to be responsive in your purchase offers because you are certain to get a mortgage.
What to do if a mortgage application is refused?
Before approving yourmortgage application, the lender verifies that the property you wish to purchase meets the lender’s pre-defined conditions. You may be turned down by a lender if you have a bad credit history or for other reasons.
If your mortgage application is denied:
- You can reapply for amortgage but for a smaller amount
- The lender may offer you a higher interest rate
- You can pay a higher amount for your down payment
- You can consign a third party to your mortgage
Questions to ask yourself before applying for a mortgage pre-approval
Fixed or variable rate
When you are in contact with one of our brokers, we will explain the differences between a fixed rate, a variable rate, a capped rate, the terms and options available.
So when you apply for your mortgage pre-approval, you will be able to choose between a fixed rate and a variable rate.
We will analyze your financial situation, your risk tolerance and your priorities.
If you prefer to have financial stability, we advise you to opt for a fixed rate, if you wish to limit the mortgage penalties, and you think that the rates could go down, we advise you to opt for the variable rate.
However, every situation is different. The best thing for you to do is to discuss it with one of our mortgage brokers to determine which rate is best for you.
Pre-approved rate term
Once you are pre-approved for a mortgage, the pre-approved rate is locked in for you for up to 12 months depending on the lender.
Amortization period of your mortgage
It is important to determine the amortization period of your mortgage in advance. The amortization period corresponds to the period during which you must repay your mortgage loan. Amortization periods in Quebec are generally between 25 and 30 years, but some alternative lenders allow for a longer amortization period, 35 and 40 years.
The longer your amortization period, the lower your monthly payments will be, but the more interest you will pay over the term.
If you choose a shorter amortization period, your monthly payments will be higher but the total amount of interest paid will be lower because your loan will be paid off faster.
We advise you to contact our mortgage brokers who will help you choose your amortization period.
Mortgage Pre-Approval – FAQ
How long does a mortgage pre-approval application take?
If we have all the requested documents, within a few hours you can get an answer.
However, we will need all your documents, which can sometimes take several days to obtain.
Don’t wait until the last moment to come and see us. It may be too late.
Differences between pre-approval and pre-eligibility
A mortgage pre-qualification allows you to give an estimate of the maximum loan a lender can give you. A mortgage pre-approval is a form of commitment by your lender to give you a mortgage. However, it remains conditional until your situation changes.
Other costs associated with the purchase of your property
- Home insurance
- Condo fees
- Municipal Taxes
- School taxes
Does a mortgage pre-approval application affect your credit rating?
Mortgage pre-approval can affect your credit rating, especially if you make too many applications in a short period of time. If you only apply once, then the impact is minimal.
Is a mortgage pre-approval application binding on you?
No. You are free to take out your mortgage at any institution you wish. Moreover, we will see with you at the right time if there is not another offer more advantageous for you, if it is the case you will be able to choose a more interesting option.
Is the lender committed to providing you with the loan if you are approved for mortgage pre-approval?
With an approved mortgage pre-approval, the lender will commit to granting you the mortgage provided that your situation remains the same as it was at the time of application and that the value of the property is supported.
