What mortgage pre-approval actually means and why you should care

Okay, mortgages. Yes, we’re going there.

If you’re not thinking about buying a place right now, chances are, you could be soon. Because let’s face it — a studio in the city where there’s just enough room for your bike, sofa, and a queen-size bed, might not be what you want in the long term.

According to a new TD survey, roughly 81% of millennials say they hope to own their own home, so when it’s time to start shopping for your first home, it’s important to educate yourself.

Apartment building/Shutterstock

You can view as many homes as you like, but without understanding what you will actually be able to afford, things can sometimes feel overwhelming. That’s where a mortgage pre-approval comes in. Looking at home prices realistically based on what you will be able to afford, both now and in the future, will save you a lot of time in your search and help you make the right decision. And, TD’s online mortgage pre-approval lets you apply for a pre-approval anywhere, at any time that suits you. That means you could apply on your lunch break in as little as five minutes and even receive an immediate response.

But what about mortgage prequalification, you ask? Some lenders offer the ability to get you pre-approved or pre-qualified for a mortgage, but it’s important to understand that the two are not the same. Getting pre-qualified for a mortgage gives you a general idea of how much mortgage you might be approved for, but this may not be the amount you receive. When you’re pre-approved for a mortgage, you have a much clearer picture of the home you can afford and what you’ll pay each month, giving you the confidence to shop for the right home in the right postal code and price range.

“With a TD pre-approval, we will hold your interest rate for 120 days, so you can focus on shopping for your new home, and not worry about whether your rate might go up during that time,” explains Pat Giles, vice president of Real Estate Secured Lending at TD. “This gives homebuyers the confidence to shop for a home that fits their needs and lifestyle.”

Couple/TD

When you’ve found your dream home in the ideal location, what happens next? When moving from pre-approval to purchase, seeking financial advice from a mortgage specialist is an important step, especially if you’re a first-time home buyer. A mortgage specialist can help you understand the costs of homeownership, beyond your mortgage payments, such as closing costs, land transfer tax and planning for home maintenance.

One thing is for sure: The homebuying process is changing as a result of digitization. And as mortgage provider, TD understands that customers want choice when it comes to interaction throughout the homebuying process.

If you’re applying for a mortgage, you can interact in whatever way works best for you — in-branch, with a TD mobile mortgage specialist who will come to you, or online with TD’s digital mortgage app. This gives you proactive and personalized options to work with TD when and how you want. And if you’ve got a busy schedule, this balance of ease, convenience, and support, makes a big difference.

Mortgage application/TD

A lot has changed in the Canadian housing market in recent years, and affordability is one of the biggest challenges that millennials face today when it comes to homeownership. So, it’s important to do your homework, be prepared and set yourself up for success.

Happy home hunting!