Understanding Your Pre-Approval: What to Do Now and What Happens Next

Tim Lyon • May 28, 2025

Congratulations! You've received your pre-approval and you're ready to start shopping. But you might have questions: What does this pre-approval actually mean? How do you use it? What happens when you find a property?

This guide explains everything you need to know now that you're pre-approved.


What Your Pre-Approval Means

Your pre-approval is my expert analysis of what you'll qualify for, based on:

  • Thorough verification of your income, down payment, debts, and credit
  • My in-depth knowledge of lender guidelines and policies across 50+ lenders
  • Current interest rates and mortgage products
  • Analysis performed the same way a lender's underwriter will review your file


Important: At this stage, no lender has formally reviewed your file. That happens only after you have an accepted offer.


Why You Can Shop with Confidence

You might wonder: "If a lender hasn't seen my file, how can I trust this?"


I analyze your file the exact same way a lender will. I understand what each lender looks for, how they calculate income, what down payment sources they accept, and their credit requirements.


I catch issues before they become problems. By thoroughly reviewing everything myself, I identify concerns early when we have time to address them, not when you're under pressure with an accepted offer.


I take responsibility for accuracy. When I tell you what you're pre-approved for, I'm putting my professional reputation behind that assessment.


This approach gives you flexibility. Once you find your property, we can choose the optimal lender for your specific situation rather than being locked into one from the start.


After Your Pre-Approval

Now that you're pre-approved, here's what you need to know while shopping:


Share Your Budget With Your Realtor

Let your realtor know your price range so they can focus on suitable properties.
Tip: Your comfortable budget and your maximum pre-approval amount are not the same thing. Many clients choose to stay below their maximum to keep room for:

  • Unexpected costs or repairs
  • Furniture or moving expenses
  • Comfortable monthly cash flow
  • Future flexibility


Do Not Take On New Debt

This is critical. Avoid applying for or taking on any new credit, including:

  • Car loans or leases
  • New credit cards or “store savings” cards
  • Furniture or appliance financing
  • Personal loans
  • Co-signing for someone else’s debt
  • Increasing credit limits


Why it matters: Every $100 in new monthly payments can reduce your mortgage borrowing power by about $13,500. A $400 car payment could lower your maximum purchase price by more than $50,000.

When in doubt, call me first before financing anything new.


Other Changes to Avoid
  • Large withdrawals from your down payment funds
  • Job changes or switching to commission-based income
  • Big purchases on credit (even if you plan to pay them off)
  • Co-signing for someone else’s loan

A simple call before making a financial move can prevent major delays or lost opportunities.


Pre-Approval Validity

Your pre-approval stays accurate as long as:

  • Your income, employment, debts, and credit remain the same
  • Interest rates don't change dramatically
  • Lender policies remain consistent

If rates or lender policies shift significantly, I’ll contact you to review and update your numbers.


Rate Protection

If you’re worried about interest rates increasing while you shop, we can look at setting up a rate hold.


What’s a rate hold?

A rate hold is a commitment from a lender to lock in a rate for up to 120 days. If rates rise, you’re protected. If rates fall, you’ll get the lower market rate instead.


When does it make sense?

Rate holds are most useful when:

  • Rates are expected to increase in the near future
  • You’re close to your maximum budget and even a small rate increase could affect your approval
  • You simply want peace of mind about potential rate changes


My Approach

Rate holds don’t lock you in permanently with that lender, but they can limit flexibility because the lender, term and rate type has to be selected upfront. More importantly, rate hold rates are usually higher than current market rates, so I only recommend one if it looks like rates will rise significantly.


In a rising rate environment, a rate hold makes sense and becomes standard practice. In a flat or declining rate market, it usually isn’t necessary.


Questions Always Welcome

Want to discuss different scenarios? Found a property that's slightly outside what we discussed? Need to run numbers on a specific home? Wondering if a financial decision will affect your approval? I'm always available.


When You Find Your Home

Here's exactly what happens when you're ready to make an offer:


Step 1: Give Me a Heads Up

  • Share the property address and details
  • I'll confirm it fits within your pre-approval
  • I'll flag any special considerations for that property type


Step 2: Your Realtor Includes a Financing Condition

Your offer should include a "subject to financing" condition. This protects you if financing cannot be secured. Standard condition periods are 5-10 days.


Step 3: I Submit Your Application to the Optimal Lender

Once your offer is accepted:

  • I evaluate the best lenders and options for your situation and this specific property
  • We have a call to go through the options and finalize the lender and mortgage product that you want.
  • I submit your complete application with all documentation


Step 4: The Lender Reviews and Provides Conditional Approval

  • The lender examines everything I've already verified
  • They may request additional clarification or documents
  • Usually issue conditional approval within 1-3 days


Step 5: We Clear Any Conditions

  • Provide any additional items the lender requested
  • Complete property appraisal if needed
  • Typically 3-7 days total


Step 6: You Receive Full Approval

  • All conditions satisfied
  • You're fully approved
  • You can remove your financing condition with confidence


Step 7: Closing

  • Your mortgage funds
  • You get the keys to your new home


Because I've already thoroughly analyzed your file, this process typically goes smoothly with few surprises.


Common Questions

What if something about the property affects lending?

Some properties require special financing (e.g., certain condos, properties with rental suites, unique property types). When you share property details with me before making an offer, I'll flag any special considerations and ensure we're targeting the right lenders.


What if I accidentally applied for new credit?

Contact me immediately. Depending on the timing and amount, it may or may not affect your approval. The sooner I know, the better I can help you manage any impacts.


What if I want to look at properties above my pre-approved amount?

Let's talk. Sometimes there are ways to increase your purchasing power (larger down payment, co-signer, etc.). Other times, it's better to stay within budget. I'll give you honest advice about what's realistic.


Can my pre-approval be denied when we go to a lender?

This is extremely rare when I've done thorough analysis and your situation hasn't changed. If it happens, it's usually because something changed (new debt, job change) or there was undisclosed information. My full underwriting process minimizes this risk.


Your Next Steps

Start shopping: You're ready to look for homes with your realtor. Share your comfortable budget with them (which may be less than your maximum pre-approval).


Protect your approval: Don't take on any new debt or make major financial changes. When in doubt, call me first.


Rate protection: If you're concerned about rates increasing, let's discuss whether a rate hold makes sense.


Found something? Give me a heads up before making an offer so I can confirm it fits your pre-approval.


Questions? I'm always available to discuss scenarios, properties, or any concerns.


Glossary

Pre-Approval: My professional review of what you qualify for, based on verified finances and lender guidelines.


Conditional Approval: A lender’s preliminary approval pending document or property verification.


Financing Condition: A clause in your offer that protects you if financing cannot be secured.


Lender: A financial institution that provides mortgage financing. This can be a bank, credit union, monoline lender, or other regulated lending institution.


Lender Approval: The lender’s final commitment after full review of your application and property.


Rate Hold: A rate guarantee (usually 120 days) that protects you from increases while you shop.

Tim Lyon

Mortgage Consultant

Credit and Mortgage Financing

By Tim Lyon • October 9, 2025
Credit. The ability of a customer to obtain goods or services before payment, based on the trust that you will make payments in the future. When you borrow money to buy a property, you’ll be required to prove that you have a good history of managing your credit. That is, making good on all your payments. But what exactly is a “good history of managing credit”? What are lenders looking at when they assess your credit report? If you’re new to managing your credit, an easy way to remember the minimum credit requirements for mortgage financing is the 2/2/2 rule. Two active trade lines established over a minimum period of two years, with a minimum limit of two thousand dollars, is what lenders are looking for. A trade line could be a credit card, an instalment loan, a car loan, or a line of credit; basically, anytime a lender extends credit to you. Your repayment history is kept on your credit report and generates a credit score. For a tradeline to be considered active, you must have used it for at least one month and then once every three months. To build a good credit history, both of your tradelines need to be used for at least two years. This history gives the lender confidence that you’ve established good credit habits over a decent length of time. Two thousand dollars is the bare minimum limit required on your trade lines. So if you have a credit card with a $1000 limit and a line of credit with a $2500 limit, you would be okay as your limit would be $3500. If you’re managing your credit well, chances are you will be offered a limit increase. It’s a good idea to take it. Mortgage Lenders want to know that you can handle borrowing money. Now, don’t confuse the limit with the balance. You don’t have to carry a balance on your trade lines for them to be considered active. To build credit, it’s best to use your tradelines but pay them off in full every month in the case of credit cards and make all your loan payments on time. A great way to use your credit is to pay your bills via direct withdrawal from your credit card, then set up a regular transfer from your bank account to pay off the credit card in full every month. Automation becomes your best friend. Just make sure you keep on top of your banking to ensure everything works as it should. Now, you might be thinking, what about my credit score, isn’t that important when talking about building a credit profile to secure a mortgage? Well, your credit score is important, but if you have two tradelines, reporting for two years, with a minimum limit of two thousand dollars, without missing any payments, your credit score will take care of itself, and you should have no worries. With that said, it never hurts to take a look at your credit every once and a while to ensure no errors are reported on your credit bureau. So, if you’re thinking about buying a property in the next couple of years and want to make sure that you have good enough credit to qualify, let’s talk. Connect anytime; it would be a pleasure to work with you and help you to understand better how your credit impacts mortgage qualification.

How Mortgage Rates Work: Fixed vs. Variable

By Tim Lyon • September 26, 2025
What affects mortgage rates? Does the Bank of Canada rate affect fixed-rate mortgages? These are questions that come up all the time, so in this this post, I’ll explain how fixed and variable rates are determined, why they don’t always move together, and what that means for you as a borrower. But to start with the short answer: While Bank of Canada announcements immediately impact variable rates, fixed rates usually have those expectations already baked in long before the announcement. That’s because fixed rates are forward-looking — they reflect where markets think rates are headed, not just where they are today. What Are Fixed and Variable Rates? Fixed Rate The interest rate stays the same for the entire mortgage term. Payments remain consistent, no matter what happens in the market. Variable Rate The interest rate changes during the mortgage term, moving up or down depending on the lender’s prime rate. Payments may stay the same (VRM) or change (ARM). How Do Fixed Rates Work? When you choose a fixed rate, the lender is guaranteeing your rate for the length of your term . To do this, they need to estimate what a fair rate will be over that time. This makes fixed rates more forward-looking — they often reflect not just today’s conditions, but also what the market expects to happen in the future. Key Points About Fixed Rates Strongly influenced by the Canadian bond market (especially the 5-year government bond yield). Lenders adjust their fixed rates based on investor expectations for inflation and future interest rates. Often, Bank of Canada moves are already baked into fixed rates before they happen. Example If bond yields suggest that rates will rise in the next year, lenders may increase fixed rates now, even if the Bank of Canada hasn’t made a move yet. How Do Variable Rates Work? Variable rates move directly with the Bank of Canada’s overnight rate. When the Bank of Canada raises or lowers its rate, lenders adjust their prime rate accordingly, and variable mortgages follow. For borrowers, the most important detail is the discount from prime , because that sets the actual rate you pay. For example, if prime is 4.95% and your mortgage is Prime – 0.5%, your rate is 4.45%. The discounts lenders offer change over time. In periods of economic uncertainty, lenders usually shrink the discount they offer, which can make new variable mortgages less attractive even if prime is coming down. Key Points About Variable Rates Directly tied to the Bank of Canada’s overnight rate, which is reviewed eight times a year. Banks adjust their prime rate in response to these moves. Your actual rate = Prime – discount (e.g., Prime – 0.5%). Example If prime is 4.95% and your mortgage is Prime – 0.5%, your rate is 4.45%. If the Bank of Canada cuts rates by 0.25%, prime drops to 4.70%, and your rate automatically drops to 4.20%. Why Don’t Fixed and Variable Always Move Together? Fixed rates reflect the bond market, which looks ahead at where rates and inflation may go. Variable rates respond directly to Bank of Canada decisions, reflecting current conditions. This is why fixed rates can fall while variable rates stay flat, or vice versa. Next Steps If you’re deciding between fixed and variable, understanding how each is set is the first step. The next is to match the right mortgage type to your budget and comfort with risk. If you’d like to review which option works best for you, I’d be happy to help. Need help with your mortgage? Book a consultation or call 778-988-8409 . Mortgage Term Glossary Amortization: The total length of time it will take to pay off your mortgage completely (typically 25–30 years in Canada). Bond Yield: The return investors get from government bonds. Used as a benchmark for fixed mortgage rates. Discount (Variable Rate): The amount subtracted from prime to determine your actual mortgage rate. Fixed Rate: An interest rate that stays the same for the entire mortgage term. Mortgage Term: The length of your mortgage contract with your lender (typically 1–5 years), after which you need to renew. Overnight Rate: The interest rate at which major banks borrow and lend money to each other, set by the Bank of Canada. Prime Rate: The interest rate banks use as a baseline for loans, influenced by the Bank of Canada’s overnight rate. Variable Rate: An interest rate that changes during your mortgage term based on lender prime rates.