Pre-approvals are certainly beneficial. However, they can also be very disappointing if you are not prepared to know what they actually mean.

They DON’T mean…

They don’t mean that you have a mortgage. Until there is a Purchase Agreement (a written up contract to purchase a property) actually submitted to a bank and a commitment from the bank offered to the client, there is no mortgage. Your bank will often say, “You are pre-approved on a mortgage based on a specific rate that is being offered during this time.” Factors such as the amount of income you bring in, the amount of debt you have and even the property itself will determine whether or not the bank will actually give you a mortgage.

They don’t mean that the rate you are pre-approved for will be the rate you pay. Rate holds are temporary and depending on whether or not you qualify for the rate, you may not get what you initially bargained for.

Please note that a good preapproval will pull your credit to make sure there are no suprises. 

Preapprovals are not sent to CMHC. CMHC Insurance is required on mortgages with less than 20% down payment. CMHC cannot review your file until you have a purchase agreement. If you have any concerns please mention them to your mortgage broker/advisor so that they can be addressed before you have an offer.