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Mortgage Pre-Approval: What You Should (and Shouldn't) Do

June 7, 2019
3 mins
Modern man with salt and pepper hair talks on his phone while looking out the window

Whether you're buying your first home or downsizing into a post-retirement condo when it comes to mortgage pre-approval, here's what you should (and shouldn't) do.

You Should

Apply for mortgage pre-approval before you do anything else

In the movies, when someone decides to buy a home, the first thing they do is contact a real estate agent. But in real life, the best first step is to apply for mortgage pre-approval; you'll be one step ahead in the home-buying process and in a position to quickly act when you find that perfect home.

Compare mortgage rates and lenders

It can be tempting to don’t jump at the first 'yes' you get, but different lenders will usually have various offers. You'll be confident you're getting the best possible rate if you consider multiple lenders,

A half or a single percentage point may not sound like a lot of money, but it can add up quickly over the life of your mortgage payments.

Gather support documentation

In its purest form, a mortgage is a buyer contract, and like any contract, you'll need documentation, information, and other support materials to seal the deal.

Expect to provide identity documents such as a passport or birth certificate, bank account information, asset & debt information, along with details about your employer, how much you earn, and how long you've been with the company. Because the approval process can take a few days to happen, the sooner you begin gathering the documents you need, the better off you'll be in the long run.

Carefully review the terms before signing

Once you’ve received confirmation of mortgage pre-approval, you might want to start celebrating, but you're not done, yet. Now it's time to go through the document carefully. This agreement details mortgage specifics, including loan terms, interest rate, and pre-approval amount. It can be a challenging read with all the legal jargon but, you're agreeing to abide by all that fine print – take your time and go through it carefully.

You Shouldn't

Carry a mortgage for more than you can actually afford

It's essential to know how much you can comfortably afford to carry. If your budget is for $300,000, stick to that, even if your mortgage pre-approval is for a more substantial amount. Lenders approve you for an amount you can afford to pay back, not the amount you necessarily should spend. Online mortgage calculators, can be a great way to determine how much you can afford. Always remember, daily life has a way of costing more than we imagine.

Make new major purchases

Your current financial snapshot is the foundation of your mortgage pre-approval. That means it’s important not to change the picture. For example, buying a new car could dramatically change your income to debt ratio resulting in mortgage renegotiation (think higher rates) or even refusal.

Apply for more/ new credit

Free perks can be appealing, but did you know that every credit application you make – a retail credit card, car loan, line of credit, or co-signing a loan – impacts your overall credit rating? Wait until the purchase of your house is complete before considering new or additional credit.

Change jobs or employers

A reliable income is essential for mortgage pre-approval, lenders need to know you can pay them back. Deciding to leave your current employer (or switching jobs within the same company) can negatively impact your status. Staying in the same position with your current employer will help ensure smooth sailing toward the purchase of your new home.

When you're ready to start looking at the mortgage pre-approval process, begin by finding & comparing the best mortgage rates no matter where in Canada you are.


The RATESDOTCA editorial team are experienced writers focused on sharing stories and bringing you the latest news in insurance and personal finance. Our goal is to provide Canadians with the information and resources they need to make better insurance and financial decisions.

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