Mortgage Pre-Approval

Getting Pre-Approved for a Mortgage

As you navigate the home-buying process, it’s important to understand the steps as well as the terms used by mortgage lenders, which are very likely to include pre-qualification and pre-approval.

Pre-approved or pre-qualified — what’s the difference?

Mortgage pre-approval is a significant milestone because a lender is making a 120-day rate guarantee to you and providing you the maximum mortgage lending amount you may be pre-approved for. It entails a credit check to understand your liabilities prior to the 120-day guarantee, providing you with reassurance while you shop for a home. Pre-approvals are subject to terms and conditions, therefore it is important to be accurate with the information you provide in your pre-approval application. Note that a pre-approval is not a guaranteed loan, nor a commitment of financing. If you wish to move forward with mortgage financing you will need to get a mortgage approval which will require income verification, downpayment verification, property valuation, supporting document validation, and various other checks prior to closing. To start your homeownership journey, complete your pre-approval application online.

You can also connect with a mortgage advisor to get tailored advice for your pre-approval. When working with a mortgage advisor you may also be asked to provide financial documents to verify your financial information so that they can better support you.

Given that your circumstances may change in the time between getting pre-approved and the time you’re ready to make a purchase, there may be differences in what you can afford. As a result, it is important to connect with an RBC mortgage advisor to discuss any changes to your financial situation.

Mortgage pre-qualification, on the other hand, is intended to provide an affordability estimate without any commitment of financing by the lender, so it’s good for when you just want to get a general idea of how much you may be able to borrow. You provide a mortgage lender personal financial information, including your income, debt and assets. Based on your information, the lender will give you a tentative assessment of how much they may be willing to lend you for the purchase of a home. At RBC, pre-qualification can usually be done over the phone or online and, it’s at no cost. A pre-qualification is not a guaranteed loan, nor a commitment of financing from the lender. With our True House Affordability tool, you'll get a personalized calculation of the purchase price you may be able to afford since we use your credit rating - it only takes a few minutes and won't affect your credit score.

How pre-approval works at RBC

Getting a mortgage pre-approval means you’re preparing to take the next step in the home-buying process. Consider completing your online pre-approval now or working with a mortgage advisor to help guide you through the pre-approval process.

To complete pre-approval:

• You will need to give RBC permission to obtain a credit bureau inquiry. When completing your pre-approval through our online tool, there will be no impact your credit score.
• You will provide up to 2 years of income details and down payment amount.
• Your pre-approval will include the maximum lending amount you may be pre-approved for and a 120-day rate guarantee.
  
  *If you complete your pre-approval application using our online pre-approval tool, we’ll verify your financial and other information and pull your credit report later, at the time of full mortgage application.
  *If completing your pre-approval application with an advisor, the advisor will verify your financial and other information upfront, at the time of your pre-approval application, which includes pulling your credit report (which will impact your credit score) and providing supporting documents.

Once you qualify and are pre-approved and you’re ready to make your purchase:

• It is important to work directly with a mortgage advisor to get advice to support your application.
• You and your mortgage advisor will discuss your financial strategy and needs, mortgage amount, down payment, purchase price, etc.
• You'll learn about the various available mortgage options (fixed vs. variable rate, interest terms, payment options, amortization, etc.) and discuss which of them best suits your needs.
• With your consent, your mortgage advisor will prepare a full mortgage application, which will require you (and any mortgage co-applicant(s) applying with you) to confirm details about such items as employment, income, assets, down payment and liabilities.
• You'll give the mortgage advisor permission to obtain a credit bureau report.
• Your mortgage advisor will advise you about the documentation (income confirmation, down payment confirmation, etc.) you'll need to supply upon or before conditional approval of your mortgage.
• Any conditions must be met by their applicable deadlines in order for your mortgage to be fully approved.

Pre-approvals are subject to your continued good credit and are good for 120 days at RBC. Some lenders may provide commitments for differing lengths.

Why get pre-approved?

• When you make an offer to purchase, your pre-approved status may make it more likely for a seller to give you serious consideration and may give you more negotiating power because you have solid financial backing.
• You get a rate hold for the period set out in your pre-approval, so you don’t have to worry about rising interest rates while you look for a new home during that time.
• You’ll have a better idea of your monthly payment amounts, and how much to allocate for your downpayment.
• You'll save time house-hunting, seeing only homes you can afford.
• Real estate agents may serve you better because they know you're serious and ready to buy.
• There's no obligation to accept the mortgage unless you agree to proceed with financing after being approved.

Get your financial paperwork in order

While you’re under no obligation to obtain financing by getting pre-approved, you’ll still want to be comfortable with the amount and terms of your pre-approved mortgage. That's why it's essential that you review all your personal expenses and have a good idea of your future expenses before getting pre-approved. Learn more about knowing how much you can afford.

Consult an RBC mortgage advisor with questions on the pre-approval process or complete your pre-approval online now.