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The process of buying a home involves many steps – and for first-timers and repeat homebuyers alike, an important first step is obtaining a mortgage pre-approval.

According to a 2018 survey from the Canada Mortgage and Housing Corporation (CMHC), 37 per cent of homebuyers feel concern or uncertainty when it comes to buying a home. People worry about mortgage qualification as well as paying too much and rising interest rates.

“Being pre-approved for a mortgage creates a clearer picture of the home you can afford,” says Pat Giles, Vice-President of Real Estate Secured Lending at TD.

When determining a pre-approval amount, a lender will look at an applicant’s gross annual income, credit history, assets and liabilities, and the size of their down payment. All of these variables can influence the credit decision to qualify for a mortgage.

“A pre-approval provides the confidence to shop for the right home, in the right postal code, in the right price range,” says Mr. Giles.

Pre-approval isn’t the same as pre-qualification. With pre-qualification, prospective homebuyers have a general idea of how much they might be approved for but there's no certainty this is the actual amount they'll receive. Pre-approvals bring everything into greater focus.

“Knowing what you can afford going into the process helps set realistic expectations for a potential homebuyer,” says Karen Cox, President of the Ontario Real Estate Board.

She says buyers can refine their search to homes within an established price range, and get a sense of what funds will be needed up front.

“Another important part to the mortgage pre-approval process is learning how much you will need for a down payment and closing costs before putting an offer on a home,” says Ms. Cox.

In shopping for homes, buyers now rely more on technology, like virtual home tours and online listings. Technology has also changed the pre-approval process. Last year, TD launched a digital mortgage pre-approval that’s available across all devices and takes as little as five minutes to complete.

Homebuyers can also always apply for a mortgage pre-approval from TD with mortgage specialists directly. Whether face-to-face, by phone or with the digital application, the process is the same, says Mr. Giles: “It really comes down to choice.”

He says potential homebuyers benefit from understanding the maximum amount they could be approved for by their lender, the mortgage payment associated with the pre-approval and the mortgage rate.

“You also want to ask your lender if your pre-approval comes with a rate hold,” says Mr. Giles. “At TD, we will hold your interest rate for 120 days from the date you are pre-approved, so you can focus on shopping for a new home and not worry if the interest rate might go up during that time.”

With the right tools, looking for the home of your dreams can be more exciting and less stressful. That’s why the ability to have a mortgage pre-approval prior to making an offer is important.

“It’s a great way to start the homebuying process with peace of mind and confidence,” says Mr. Giles.


Advertising feature produced by Globe Content Studio and sponsored by TD. The Globe’s editorial department was not involved.

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