rate hold mortgage pre approval ontario canada

Do Mortgage Pre Approvals Truly Exist?

What Is a Mortgage Pre Approval?

The terms Rate Hold,  Prequalification and Pre-approval are often used synonymously, when in fact they are very different! Many mortgage brokers incorrectly use the term pre-approval, when they intend a Rate Hold. Prequalification on a mortgage application is what most clients comprehend and refer to as a Pre-approval. A Pre-approval from a mortgage lender is a true rarity and most people don’t mean this when they say it. 

We frequently obtain rate holds for our clients, to protect them from future increases in interest rates. Our prequalification process allows you to shop confidently for a new home knowing what you are able to truly afford. These two terms are what many refer to as a pre-approval because they are the most frequently employed options for people looking to shop for a new home. 

Still confused? Don’t worry we’ve outlined the true differences below!


Mortgage Rate Hold: 

This means that the lender has not looked at your loan to see if it meets their criteria, it has simply accepted that it will review your application at a later date. The rate hold will guarantee their current fixed rates or variable rates, providing the deal funds within the next 90 – 120 days. As interest rates fluctuate this can be a great tool to lock down preferred mortgage rates.

Rate holds guarantee that the rate offered will not increase during the term of the agreement, generally either 90 or 120 days. This can be crucially beneficial when markets are on the change. Protecting you from rate increases while still allowing access to a lower rate (if the rates drop) when you go through the formal underwriting process for your mortgage.

Mortgage Prequalification:

This does not guarantee that you actually qualify for the loan. Some basic documentation will be reviewed to determine if you are eligible for the mortgage. It is virtually impossible to determine an affordable price range and the amount a lender may be willing to provide if you have not gone through a formal pre-qualification process. That process will usually result in a rate hold, guaranteeing your interest rate for a set amount of time. 

Going through the process is easy, free and necessary, and we are always at your service in this regard. Given our strong relationships with the underwriting staff at our lending partners, we can often review files with them informally in advance of a purchase if your circumstances require some clarification or special understanding; even if the lender will not provide a formal, fully underwritten pre-approval.

Mortgage Pre Approval:

This is where the lender underwrites your complete application to confirm whether or not you fit the lender’s criteria. Getting pre-approved can give you peace of mind when house shopping – you’ll know your ideal price range. Note, very few lenders provide a true Mortgage Pre approval as large part of the approval is based on a subject property and mortgage amount. Without knowing this information the majority of lenders will not underwrite a mortgage product.

Need a mortgage pre-qualification  before you go house-hunting?
Contact our mortgage professionals in Burlington, ON to know more about the Mortgage Approval process and the ways you can pre-qualify for a mortgage.

*Subject to approved credit, income verification and meeting lending credit granting criteria. Applies to residential mortgages only and some conditions may apply. O.A.C., E.O.E All content is subject to change without notice.

Here’s what the Government of Canada has to say about mortgage Pre Approvals https://www.canada.ca/en/financial-consumer-agency/services/mortgages/preapproval-qualify-mortgage.html

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