4 November 2010

But it doesn’t work so in case of variable mortgage – there is no way to lock in a floating rate loan. Here is another variant: the lender can only hold your prescribed discount to prime. If you are pre-approved for a variable rate of prime minus 80, and the lender then reduces the discount to prime minus 50, you still can borrow at prime minus 80.
Yes, the pre-approval procedure comes with many conditions that you have to satisfy before getting a firm mortgage commitment, but it gives you a good look at whether your borrowing plans are realistic. It’s quite important to understand your buying budget, because it can save you much time while searching for a necessary house.
Moreover, many lenders will let you increase your borrowing sum without losing your rate hold, but it’s best to get pre-approved for your maximum mortgage amount at once. Another thing to remember is that evaluating any part of your application can involve some subjectivity such as determining how much of your self-employed income will be used for qualifying purposes. In this case a good mortgage broker will solve the problem.
The main difference between a pre-approval and an approval is the fact that a pre-app doesn’t provide any details about the subject property (but when you apply for a mortgage, it will be very important). In addition to it, some pre-approvals are limited to very basic information – they actually seem to be designed just to build a marketing database. A professional mortgage broker will explain to you all the details of the pre-approval process.  
It’s necessary to be very careful while choosing a lender for pre-approval. The trick is that it seems quite meaningless, it costs nothing and doesn’t involve a firm commitment from you, but in the end you turn out to be in a long-term financial relationship with your lender. That’s why you should pay attention to your lender’s mortgage policy: review the lender’s contract terms and conditions, conversion rates possibility, prepayment privileges, penalties and so on.
And, of course, it’s always recommended to consult a professional independent mortgage broker to see if it’s necessary to get pre-approval in your case and understand all the important issues of this procedure.

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