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

Mortgage Renewal vs. Refinance: Understanding the Key Differences

By Tim Lyon • November 25, 2025
If you own a property with a mortgage, you've probably heard the terms "renewal" and "refinance" thrown around. While both involve obtaining a new term for your mortgage, there are some important differences to understand. Let's break down what each one means and when you might use them. Understanding Mortgage Basics In Canada, when you take out a mortgage, the payments are typically spread over 25 to 30 years. This period is known as the amortization. However, unlike in the U.S., Canadians do not keep the same interest rate and payment terms for the entire amortization period. Instead, you have an initial term, usually 3 to 5 years, after which you need to renew into a new term. For example, if you have a 25-year mortgage with 5-year terms, you will need to renew your mortgage four times throughout its lifespan. It's also common to have a mix of different term lengths over the course of your mortgage. What is a Mortgage Renewal? A mortgage renewal occurs at the end of your mortgage term. When you renew, you start a new term with a new interest rate while keeping the remaining details of your mortgage the same. The key element here is that the mortgage charge registered on your property's title remains unchanged. A renewal is straightforward and typically does not involve any significant changes to your mortgage agreement other than a new interest rate. Think of it as hitting the "continue" button on your mortgage, but at new rates. What is a Mortgage Refinance? A mortgage refinance is different. When you refinance, you are making changes to your original mortgage agreement. This means paying off your existing mortgage and registering a new one on your property's title. Essentially, you are taking out a completely new mortgage for the same property. People commonly refinance to: Access the equity in their home for investments or major purchases Consolidate high-interest debt into their lower-rate mortgage Extend the amortization period to reduce monthly payments and improve cash flow Make significant changes to their mortgage structure It's important to note that refinancing is not allowed for insured properties (those with less than a 20% down payment at purchase). This means the maximum loan amount in a refinance is 80% of your property value. What About Switching Lenders? If you want to keep everything the same but switch lenders for a better rate, this is known as a transfer. A transfer is a type of renewal where the original mortgage charge is transferred from one lender to another. Depending on the lenders involved, you might be able to make minor changes (like extending the amortization or changing borrowers) without needing a full refinance. Why Timing Matters Your mortgage maturity date is when your current term ends. This is the ideal time to either renew or refinance. If you refinance or switch lenders before the maturity date, you will face a prepayment penalty. If you refinance, renew or transfer at maturity, there is no penalty. Real-World Example A homeowner with a $450,000 mortgage is reaching the end of their 5-year term. Their lender offers a renewal rate, but they also have $40,000 in high-interest credit card debt. Option 1: Renewal They accept the new term. Their mortgage stays the same. Their debt remains separate at high interest rates. Option 2: Refinance at Maturity They consolidate the credit card debt into the new mortgage. Their total monthly payments drop significantly, even after accounting for the new mortgage balance. In this situation, refinancing provides better cash flow and a simpler payment structure. Quick Summary Mortgage Renewal: Starts a new term for your existing mortgage Mortgage charge on your title stays the same Keeps all other terms the same aside from interest rate Can switch lenders at renewal through a transfer No penalty when done at maturity Mortgage Refinance: Pays off current mortgage and creates a new one New mortgage charge registered on your title Often resets the amortization period Can access equity or make structural changes Maximum 80% of property value for uninsured mortgages Incurs penalty if done before maturity Next Steps Understanding the difference between renewal and refinance helps you make informed decisions about managing your mortgage. If you have a renewal coming up or are considering accessing your home equity, now is a good time to explore your options. Whether you're looking to renew, refinance, or switch lenders, I'm here to help you navigate the process and find the best solution for your situation. Need help with your mortgage? Book a consultation or call 778-988-8409 . Glossary Amortization: The total time period over which you'll pay off your mortgage, typically 25-30 years in Canada. Insured Mortgage: A mortgage where the down payment was less than 20%, requiring mortgage default insurance to be added. Maturity Date: The end date of your current mortgage term, when you need to renew or refinance. Mortgage Charge: The legal registration of your mortgage on your property's title. Pre-payment Penalty: A fee charged by your lender if you pay off your mortgage before the end of your term. Refinance: Replacing your existing mortgage with a new mortgage, often with different terms or to access equity. Renewal: Starting a new term for your existing mortgage, typically just updating the interest rate. Term: The length of time your current mortgage contract is in effect, typically 3-5 years in Canada. Transfer: Moving your mortgage from one lender to another at renewal without changing other terms.

What Is an Insured Mortgage and How Does It Work?

By Tim Lyon • October 28, 2025
If you're buying a home with less than 20% down, you'll need something called an insured mortgage. Many borrowers find this confusing at first, especially since it doesn’t refer to insurance for you, the borrower. That’s why I have put together this straightforward breakdown so you understand what insured mortgages are, why they exist, and how they affect your purchase. What Is an Insured Mortgage? A mortgage must be insured when a borrower makes a down payment of less than 20% on a home purchase. The insurance protects the lender (not the borrower) in case the borrower defaults. The insurance is guaranteed by the federal government. So, why do we have this program? It allows borrowers to buy homes with smaller down payments and higher loan-to-value (LTV) ratios. Higher loan-to-value mortgages are inherently more risky because there is not much cushion if the housing market starts to decline. For example, if someone buys a $500,000 home with only 5% down ($25,000), they’ll need a $475,000 mortgage—this is a 95% LTV . If the market drops and the home’s value falls to $470,000, the mortgage would still be $475,000. If the borrower stopped making payments, the lender could lose money after selling the home and paying costs. That kind of loss, multiplied across thousands of borrowers, could threaten the stability of the entire banking system (as we saw in the U.S. in 2008). The mortgage insurance system is designed to prevent that scenario by spreading risk and keeping lenders protected. How Does the Insurance Work? You, the borrower, pay the insurance premium. It's typically added directly to your mortgage balance rather than paid upfront. The cost depends on your down payment size and amortization. Example: Purchase price: $500,000 Down payment: $25,000 (5%) Mortgage amount: $475,000 Insurance premium: 4.2% = $19,950 Total new mortgage: $494,950 The insurance does add cost, but insured mortgages usually offer slightly lower interest rates because the lender's risk is minimal. The rate savings don't fully offset the premium, but they help. The Insurer’s Role For insured mortgages, the insurer’s approval is the most important part of the process. If the insurer won’t approve the file, no lender can. Once the insurer signs off, we can typically find a lender to fund the loan. Canada has three mortgage insurers: CMHC (public) Sagen (private) Canada Guaranty (private) All of the insurers are backed by government guarantees and have to follow similar rules, but each has a few unique programs. Lenders usually choose the insurer, though I sometimes work with them to send a file to a specific insurer if it benefits the borrower. Qualification Rules Because insured mortgages are government-backed, the rules are strict: Debt ratios: 39% of your income can go toward your stress-tested mortgage payment, property taxes, heat, and half of condo fees 44% of your income can go toward the above plus your other debts Down payment: 5% on the first $500,000, 10% on the remainder Maximum purchase price: $1.5 million Amortization: Maximum of 25 years for most buyers; up to 30 years for first-time buyers who qualify under the new federal program Unlike with an uninsured mortgage, where lenders may have some flexibility if your income ratios are slightly above the limits, there is no discretion on an insured mortgage. If your ratios exceed the limits even a little bit, the insurer will decline the application. The Approval Process The process is similar to an uninsured mortgage, with one extra step: We submit your mortgage application to the lender of choice They do their initial review If that looks good, they package it up and send it to the insurer Once the insurer has reviewed and approved it, the file comes back to the lender for final review and approval Common Misunderstandings About Insured Mortgages Many borrowers are surprised to learn the following facts about insured mortgages: You do not need to be a first-time homebuyer to buy with less than 20% down You cannot buy an investment property with less than 20% down You can buy a second home with less than 20% down You cannot refinance an insured mortgage and keep the insurance. If you have an insured mortgage and do refinance, you will lose the insurance. This mostly affects the lender, but it also moves you to uninsured rates. Why Choose an Insured Mortgage? Given the cost and restrictions, why would anyone choose an insured mortgage? The main reason is accessibility . It allows you to buy a home without saving a full 20% down payment, which is increasingly difficult with high home prices and living costs. It can also be a strategic choice. Some buyers prefer to keep more of their savings invested or diversified instead of tying everything up in a down payment. If your investments are earning more than your mortgage costs, keeping that money invested might make financial sense. Real-World Example Let's say you're buying a $600,000 home. Here's how the costs compare between the minimum down payment for an insured mortgage and the minimum down payment for an uninsured mortgage: