(587) 414-0812 josh@mortgagesforless.ca

      If you’ve never bought a house before, you might think the first thing to do is go house shopping! This can be a lot of fun, but it can also set you up for disappointment. The best first step you can take to pave the way to your first home is to get a pre-approval.


      A mortgage pre-approval is an application you submit to a lender that details your financial profile and your intent to apply for a mortgage with the lender. Your financial profile includes details on your income, debts, assets, and credit score. The best way to submit this application is with a mortgage broker. This is because they have access to multiple lenders and can submit your application to all of them simultaneously. You might worry how this will affect your credit score, but rest assured that no matter how many lenders the broker sends your application to, it will only count as one hit to your credit. If you were to do the same thing on your own and make applications to lenders back to back, it would seriously hurt your credit, even to the point that you can no longer get approved. So don’t do that. It’s smarter, safer, and faster to use a mortgage broker.


      Once the lenders receive your application they will send back a report to your mortgage broker. This report will indicate whether or not the lender is likely to approve you for a mortgage, how much they are willing to lend you (maximum borrowing limit) and the various interest rates they will offer you. This information will give you a good idea of what you may be approved for once you send in your official mortgage application. From here you can pick a realtor and start house hunting, or you can wait until you are in a better position to buy. The good news is that the pre-approval service is free and there is no obligation to move forward with a home purchase.

      Moving forward

      If you do decide to move forward with a home purchase, the next step is to choose your lender. Your mortgage broker will lock in your rate for 90-120 days and you’ll be free to start shopping without having to worry about interest rates going up in the mean time. If rates happen to drop your broker will be able to get you a lower rate than the one you lock in at.

      Your pre-approval will include your maximum borrowing limit, but don’t use this amount unless it’s what you want and you know you can afford it. Be honest with yourself as you look over your spending habits and create a manageable budget. Showing the seller you have a pre-approval will tell them you’re a serious buyer and give them the confidence to work with you. If you wait until you want to make an offer on a property before you get a pre-approval you could end up waiting days before you get an answer from the lender. By that time someone else may have purchased the home you had your eyes on. Or worse, you could find out that what you’ve been approved for may be no where near enough to pay for the kind of house you had in mind. Don’t set yourself up for disappointment. Start with a pre-approval.

      No guarantees

      A pre-approval is not a promissory note. Your lender may refuse to approve your mortgage in the end for a few different reasons. The first reasons is that the information you provided in your pre-approval was inaccurate. The second and most common reason a lender may not approve your mortgage is because something changed about your financial profile between the time you submitted your pre-approval and the time you send in your mortgage application. This can happen when you lose your job or start a new one, if you take on more debt, or if you miss payments on services (such as a cell phone.) In order to keep your pre-approval status in tact, don’t change anything about your financial profile until your mortgage agreement is signed and sealed. The last reason a lender may not approve your mortgage is because the home you have chosen does not meet qualifications. This happens most often in older homes that are not up to code and in homes that are priced higher than their value.

      The mortgage pre-approval is a free and quick tool to help you get a good idea of what direction to head in on your hunt for your first home. Contact us today to get started or try our online application tool below!