Is Your Mortgage Pre-Approval Actually Useless? Here’s Why It Might Be

Christine MacPherson • August 1, 2025

A Rate Hold Isn’t a Guarantee—And That Could Cost You the Home

Getting pre-approved for a mortgage should feel like progress. It’s exciting, empowering, and often the first concrete step toward buying a home. But here’s the hard truth: if your mortgage pre-approval wasn’t put together properly—or if your broker or banker skipped key steps—it could be virtually worthless when you need it most.


Let’s break down what a pre-approval really means, what a rate hold does (and doesn’t) do, and why experience matters more than ever in a fast-paced, competitive real estate market.


What Is a Mortgage Pre-Approval Really?

A mortgage pre-approval generally includes two things:

  • A conditional approval based on the numbers provided by your broker or banker.

  • A rate hold that locks in an interest rate (typically for 90–120 days), giving you time to shop with peace of mind.

But here’s the issue: most lenders don’t actually do a full review of your application until it becomes “live”—that is, until you’ve written an offer that’s been accepted. Before that, they’re mostly relying on the information submitted by your broker or banker, not what they’ve verified themselves.

The Danger of a Sloppy Pre-Approval

Because lenders are only reviewing estimated numbers initially, a pre-approval is always conditional. If anything doesn’t add up when they finally double-check it, you could lose your approval—and possibly your home.


Here are some common issues that can derail things during a live file review:

  • Your income was calculated incorrectly (especially for variable or self-employed income)

  • There’s undisclosed debt (like student loans, car leases, or co-signed obligations)

  • Your down payment source wasn’t verified properly

  • Something as simple as a missed document throws off the whole deal

This is why it’s so critical to work with an experienced broker who knows how to present your file correctly the first time.


⚠️ Pro tip: If your broker or banker didn’t ask for full income documents, verify your credit, and analyze your debt load, you don’t have a real pre-approval—you have a placeholder.

Rate Holds: What They Do and What They Don’t

Rate holds are helpful, no question. They give you a buffer against rising rates while you search for the right property. But even if you’re holding a great rate, that doesn’t guarantee your mortgage will go through when it counts.

Lenders only commit to financing once they’ve verified everything. And even then, there’s another major piece of the puzzle...


Your House Has to Qualify, Too

This surprises a lot of buyers: just because you are approved, doesn’t mean the home is. Lenders always assess the property you’re buying, because they’re investing in it with you. If something about the home makes them uncomfortable—like:

  • A poor inspection

  • A property in a high-risk location

  • Structural or zoning issues

  • A condo building with known financial concerns

...they can walk away. This doesn’t mean your homeownership journey is over—but it does mean you need someone in your corner who can help pivot to another lender or solution quickly.

Why Experience Matters More Than Ever

A pre-approval is only as good as the person behind it. An experienced mortgage broker will:

  • Fully underwrite your file upfront

  • Spot issues before the lender does

  • Explain what could cause problems down the line

  • Prepare you for the reality of lender and property review

This extra care can be the difference between closing confidently and scrambling under pressure.

Final Thoughts: Ask the Right Questions Before You Rely on That Pre-Approval

Before you start house hunting, ask your mortgage expert:

  • Was my income fully reviewed and verified?

  • Did you check my credit?

  • Have you reviewed all debts and liabilities?

  • Is my file ready to go live?

If the answers are vague or rushed, it might be time for a second opinion.

SHARE THIS ARTICLE

RECENT POSTS

No-Payment Mortgage Options: Are They Right for You?

By Christine MacPherson • April 11, 2025
When people hear “no-payment mortgage,” they often assume it’s too good to be true or that it comes with hidden risks. But in Canada, these options are designed to be conservative and sustainable, giving homeowners more financial flexibility without putting them in a bad financial position. There are three main types of no-payment mortgage options: Reverse Mortgages – Available to homeowners 55+ with significant home equity. Alternative Lenders – Offer similar options regardless of age but require strong equity. Private Lenders – Short-term solutions for homeowners who need temporary relief. Let’s break them down and see if one might be a good fit for you. Reverse Mortgages: Not as Risky as You Think Reverse mortgages tend to get a bad reputation, mostly because of how they were handled in the U.S. years ago. But in Canada, lenders are far more conservative. The biggest difference? Canadian reverse mortgages never allow you to owe more than your home is worth . How Do They Work? You must be 55 or older to qualify. You can borrow a portion of your home’s value , usually up to 55% . The older you are, the more you can borrow —since the lender calculates how long you’re likely to stay in the home. You don’t make monthly payments —instead, the interest gets added to your loan balance over time. When you sell or move, the loan is repaid from your home’s value. Why Can’t You Owe More Than Your Home’s Value? Most lenders offer a no-negative equity guarantee , meaning even if home prices drop, your estate will never owe more than your house is worth. But realistically, Canadian home values have remained stable or increased over time , making it unlikely you’d ever reach that point.

Should I renew or refinance my mortgage_

By Christine MacPherson • March 31, 2025
Should I renew or refinance my mortgage? Millions of Canadians are reaching the end of their mortgage term, eager to secure the best possible rate. While many focus on renewing their existing mortgage, they may overlook the possibility of refinancing—a decision that could make a big difference in their financial picture.  What’s the Difference Between Renewal and Refinance? Renewal: At the end of your mortgage term (commonly 5 years), you need to “renew” your loan to keep it active. When you renew, your mortgage balance and amortization period (the total time you have to pay it off) stay the same. You can renegotiate your interest rate, but you can’t borrow additional funds or change the original loan amount. Example. You bought a home in June 2020 and had a mortgage of $400,000. After a 5-year term at 1.70%, your outstanding mortgage balance will be around $332,939.71, assuming you haven’t made any extra payments. At this point, you’ll need to renegotiate a new interest rate and choose a new term based on your remaining balance. Refinance: Refinancing allows you to restructure your mortgage. You can change the loan amount, extend the amortization period, and often access your home’s equity. This flexibility gives you the option to lower monthly payments, consolidate debt, or free up cash for other purposes like renovations or investing. Example: Say your home’s value has grown significantly since you first purchased it. Through refinancing, you could borrow more against that increased equity, giving you funds to complete a kitchen renovation, start a small business, or pay off higher-interest debts. The Impact of Rising Rates If you locked in a 1.70% fixed rate five years ago, today’s rates—often over 4.50%—may feel like a big leap. Simply renewing might leave you with a payment shock. Refinancing, however, gives you the ability to adjust your monthly obligations, even as rates rise, by stretching out your amortization or accessing equity for financial goals.
Show More