The advantages of getting pre-approved for a mortgage
The process is quick, easy and can be done anywhere, anytime
There’s really no downside to getting a mortgage preapproval—and if you’re house hunting in a competitive city like Toronto, having one can be a huge leg up. So, what is a pre-approval? Put simply, it’s confirmation from a lender that you qualify for a mortgage loan. But unlike pre-qualification, which tells you generally how much mortgage you might be approved for, pre-approval goes into far more detail. “One of the first big milestones in your home-buying journey comes at the pre-approval stage. Here, you’ll get a clearer picture of the home you can afford and what you would pay each month,” says Pat Giles, vice-president of real estate secured lending at TD.
Lenders grant pre-approvals based on a number of factors, including income, credit history, assets and liabilities, as well as the size of the down payment. “Having an idea of how much mortgage you could be approved for when starting to shop for your new home can give you confidence that you’re making the right financial decision,” says Giles.
While the pre-approval process varies from lender to lender, when someone is pre-approved by TD, the bank holds the pre-approved rate for 120 days. This can give buyers much-needed peace of mind, especially in today’s housing market. “You can focus on shopping for a new home at the right price and not worry about whether or not your interest rate might increase during that time,” Giles says.
Yet another upside to the fast and simple process of applying for pre-approval is that it lets home sellers know you’re serious about buying a home. In a multiple-offer situation—far from unheard-of in Toronto—a pre-approval could be the difference between a successful and an unsuccessful bid. Whether you’re in the resale market or you’re looking to buy a shiny new home, pre-approval is key. Many homebuilders may require proof of a pre-approval, and with condos becoming more and more popular in the GTA, it’s never been more important to be pre-approved.
“Buying a home is one of the biggest purchases most Canadians will ever make, and in today’s market, it’s especially important to understand your full financial requirements upfront,” Giles says. He adds that, while some lenders only offer the ability to start your mortgage pre-approval online, TD customers can complete their entire full applications online. If they have any questions, they need only call or visit their local branch to apply—the pre-approval is the same whether it’s
done online or in person. When the time comes to submit an offer and finalize the full mortgage agreement, many home-buyers choose to also complete this step online. The new TD digital mortgage application conveniently lets customers apply for a full mortgage online, on their own time and at their own pace.
“Canadians have different needs when it comes to home ownership, and for the majority, their path begins by going online,” adds Giles. “It’s all about having choice, convenience and confidence during one of the most important milestones in your life.”