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How long does it take to get approved for a mortgage in Canada

How long does mortgage approval take in Canada?

How long does mortgage approval take in Canada?

Finding a suitable mortgage is as important as finding a dream home. You’ll likely need to get mortgage approval quickly when you find a home. In this article, we will break down the approval process and how long it takes. 

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How long does it take to get approved for a mortgage in Canada

What is a mortgage?

A mortgage is a loan that allows you to purchase a piece of property. Once you find a house you like, the next step is to find a mortgage lender. You have to make a 5%-20% down payment on the property based on its cost, and the rest can be a mortgage. 

The mortgage process is similar when you’re buying a second piece of property, but the standard to get approved is usually higher with traditional mortgage lenders. One way you can secure another house is by accessing your home equity loan for the down payment, and getting another mortgage loan will be simpler.  

Mortgage pre-approval vs approval

Despite their similar names, they imply different stages of getting a mortgage.  

  • Pre-approval—you can get pre-approved with different banks and lenders simultaneously to determine your approval limit and affordability. You can look for mortgage pre-approval online, which is a step that you do before looking for a house. 
  • Approval—getting approved for a mortgage happens later in the process, usually after you formally apply for a mortgage loan from a lender. Once this happens, the underwriting process starts.  

The steps to getting approved for a mortgage 

  1. Gather all documents 

Applying for a mortgage involves many pieces of information, such as your letter of employment, tax history, credit score, and bank statements. Lenders may ask for additional documentation as well. Be sure to have all of them ready before you choose a mortgage lender.  

  1. Look for a lender

Looking for the right lender is just as important as finding the perfect property. Based on your findings from your pre-approval applications and inquiries with lenders, choose one that best accommodates your financial situation.  

Compare each lender’s offers on interest rates, loan terms, and flexibility regarding pre-payments. Some lenders also offer a rate commitment for a few days after you get the quote. 

  1. Apply for a mortgage

Once you submit the requested documents to the lender, they will complete the evaluation. To determine your approval limit, a mortgage specialist will look at your down payment, debt-to-income ratio, assets, and credit score. In most cases, you should receive a response in two to three days. 

  1. Search for a house

If you know the amount you can get pre-approved for, then you’ll have a price range for when you’re exploring properties. It’s best to look for houses that are less than your maximum budget. In Canada, homebuyers bid on the houses they’re interested in, and the property goes to the best offer.  

The process of house hunting can take a couple of weeks to a few months, depending on how frequently you check the market. Although househunting is not directly part of the approval process, it can affect the length of time it takes until you get the confirmation.   

  1. 5. Get approved

Once your application has been processed, you’ll receive a confirmation. It will be followed by your lender sending you an official commitment. This document should include your interest rate, mortgage term, and other details about your mortgage. Your mortgage broker can request additional documents when they are closing the sale. 

  1. Closing day

Mortgage disbursement becomes official on the closing date, on which you bring the money for the closing costs (approximately 3-4% of the purchase price) and down payment, and you sign the mortgage documents. Once completed, the mortgage broker will notify the lender and transfer your funds to the lawyer, who will then send it to the sellers’ representatives.

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Additional tips for getting approved for a mortgage 

As we know, getting approved for a mortgage is lengthy and requires extensive documentation. Although it can be stressful sometimes, here are some tips to help you. 

  • Rely on your real estate agent—they have been through this process multiple times and can help you regarding any step of the home-buying process. 
  • Talk to your financial advisor—advisors can help you understand the process and check if you have a good credit score that can get you access to the best interest rates. Do not forget to get a list of your assets and debts to help with your mortgage application. 
  • Get a good lawyer if problems arise—the likelihood of challenges in the process is low, but some home buyers prefer to be prepared. In those circumstances, finding an experienced lawyer is best.  

Overall, the complete approval process can take around a month, depending on your unique situation. 

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Using your home equity to buy another house 

If you already own your home and you want to buy another property as a vacation home or to generate rental income, you can access your home equity as a loan. Although they’re not meant to pay for an entire house, they are useful for the down payment.  

Home equity loans can reach significant values, especially if you’ve been living in your home for decades and building your equity. Getting the funding for a down payment is a major step, and one source is your own home. You can access that value with the help of Alpine Credits.  

  1. Apply online—the application only takes a few minutes to complete and will not have an effect on your credit score. Your personal details and your house’s appraisal value are what you need to provide rather than your credit report or employment status. 
  2. Wait for approval—traditional mortgage lending can take months, but getting approved with Alpine Credits only takes 24 hours. As long as you own your home, you’re eligible for approval. 
  3. Use the funding—you’ll find the money in your bank account within a maximum of three days after your approval. You can use it for the down payment on your new additional home.  

If you’re looking for financing for you’re the down payment on your additional piece of property, consider a home equity loan from Alpine Credits. The application is simpler than at traditional financial institutions, with criteria that are more attainable.

Further reading:

Frequently Asked Question

The pre-approval process normally takes a few days. You can affect the time it takes by gathering all the required documents beforehand, but everything else is done by the lender. Your financial history, income, employment, and credit history all factor in and will give the lender an idea of how much to offer.

The approval for a mortgage is a stage in the home-buying process. It’s different from pre-approval, where you’re given an estimated budget for properties you can afford. Getting approved for a mortgage is when the sellers accept your offer. 

After you get approved, the next step is mainly paperwork to finalize the mortgage and the ownership. You’ll be asked to sign the final documents, and within a few weeks, you can move in or start preparing it for renting. You start the mortgage payments the month after. 

After approval, the lender will not likely change their mind about your approval status. However, you can still be denied a mortgage after getting a preapproval. If you run into this situation, consider lowering your mortgage amount or searching for another lender.