What is a pre-approved mortgage?

A pre-approved mortgage provides an interest rate guarantee from a lender for a specified period of time (The rate hold period is 120 days and in some circumstances when a new home/condo is being purchased a rate hold of up to 12 months can be secured (at a slightly higher interest rate) and for a set amount of money. The pre-approval is calculated based on information provided by you and is generally subject to certain conditions being met before the mortgage is finalized. Conditions would usually be things like 'written employment and income confirmation,' and 'down payment from your own resources,' for example.

Most real estate professionals will want to ensure you have a pre-approved mortgage in place before they take you out looking for a home. This is to ensure that they’re showing you property within your affordable price range. Arranging a pre-approved mortgage is one of the first steps a home buyer should take before beginning the buying process.