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REW Money 101: Pre-approval. Nailing that first impression and landing your dreamy new home.

The benefits of pre-approval: Nailing that first impression and landing your dreamy new home.
By REW Editor 2022-10-14

With homeseeking, as with dating, the better you look, the better your chances are of landing a dreamboat. Those homes you’re eyeing out are all dressed up with lustrous photography and phrases like “not-to-be-missed” - you’d better be suitably impressive if you hope for them to swipe right too.

Are you in the heady and exciting days of home-seeking? Well, stop EVERYTHING! Close the REW results page, push aside thoughts of the colour blocking you’ll paint in the den and apply for mortgage pre-approval, like, ASAP. Trust us.

Pre-approval is like having his friend introduce you.

Getting your mortgage pre-approval is important for a number of reasons. As a start, it simplifies the homeseeking process by indicating what size loan you can get. It also shows real estate agents and prospective sellers that you are a serious buyer. Finally, it enables the actual mortgage approval process to move more swiftly once your offer has been accepted. All good things. So good in fact, that we will now dedicate a paragraph to each, in our endeavour to convince you to call a mortgage broker today.

So, what is pre-approval? Hint: it’s NOT pre-qualification.

Pre-qualification is a simple online tool you can use to provide you with a broad estimate of your home-buying power. It only takes a minute to do and does not require any supporting documents. It is also called an Affordability Calculator (which is less misleading). 

There really is no harm in using one of these, especially on that first glorious night when the idea sparks to look for a new home, as long as you remember that it has no sway with lenders and it is in your best interests to apply for pre-approval before you go any further.

So that’s what it’s not. Here’s what it actually is.

Mortgage pre-approval is a letter showing the loan amount a financial institution is willing to lend you for the purchase of your home. This is generally the maximum amount you qualify for, but it doesn’t necessarily mean that you will get that mortgage when it comes down to it. The final approval will depend on the property you make an offer on and the size of your down-payment.

Mortgage approval: Making it official. 

This is the be-all-and-end-all. It requires a whack of paperwork, a home you are head-over-heels in love with and a bottle of bubbles on ice for when your thumbs-up comes through. Once you’ve put in an offer to purchase, prospective lenders will assess the age and condition of the home and determine whether the price you are paying is in line with the market. They will also do a full run-up on you, checking your personal information, financial history and credit status. 

With all this taken into account, you will be offered a mortgage amount at a designated interest rate for the purchase of your property. That’s roughly when you start polishing those champagne flutes.


Getting pre-approval involves some extra work, but it really is a valuable exercise. Here’s why:

Out of your league?

It simplifies the homeseeking by giving you a good indication of what size loan you can get.

Before granting you pre-approval, lenders will look at your income, assets and level of debt, and determine what size loan you are able to service. This will give you a helpful bracket within which you can search. It’s wise to do your own sums once you have this pre-approval to take into account your closing costs [link to article], moving-costs and on-going maintenance costs.

Are you real-deal?

It shows real estate agents and prospective sellers that you are a serious buyer.

Having pre-approval when you start engaging real estate agents and sellers can give you an advantage in a bidding war for a property. Getting an offer from a qualified buyer just makes the seller’s decision that much easier. 

From slow burn to speed date.

It enables the mortgage approval process to move more swiftly once your offer has been accepted.

It can take up to 50 days to close on a property. In life terms, that can feel like, well, a lifetime.  Pre-approval can speed up the process, because you have already engaged a lender and secured a loan and rate (in principle). This can make you very attractive to a seller who is keen to close the deal sooner rather than later.


Warning, fine print ahead.

Once you have qualified for mortgage pre-approval, don’t forget that it is generally valid for up to 120 days at a specific interest rate UNLESS (pay attention here) your circumstances change. So, if your employment status, income or down-payment amount changes, you will not be eligible for that pre-approved loan and rate anymore. 

So keep things going steady once you have ticked the pre-approval box. Oh, and once more thing (ugh, fine print is the worst): pre-approval does not guarantee you an approved mortgage. Such is life. No guarantees.

REW Advisory