Best Fixed-Rate Mortgages In Canada

Mortgage pre-approval is simply a way to reserve a fixed rate for your mortgage. The pre-approval is an agreement for the lender to hold a specific fixed rate for a period against changes in the market rate. This allows you to go house shopping without worrying about the rate increase before you find your dream home. The holding period is usually three to four months. 

In addition to your fixed-rate hold, the lender may also offer an “interest rate protection,” which protects your pre-approved rate from going up if the market rates go up before the time the mortgage is committed. Your fixed rate may not increase if the lender’s fixed-rate increases during the holding period.

On the other hand, you stand to benefit if the market rate goes down. Your pre-approved fixed rate may decrease if the lender’s fixed rate has gone down before the mortgage is committed. 

Thus, getting pre-approved is an easy way to lock in a fixed rate if you plan to buy a house within the next four months. It doesn’t hurt. You are protected if the interest rate goes up and will benefit if the interest goes down. 

The pre-approved fixed rate, terms, and conditions will all expire at the end of the holding period. Depending on the lender, it usually takes three to four months if you cannot commit to the mortgage.