Understanding the Mortgage Loan Approval Process in Canada

Applying for a loan can be very frustrating when you don’t know what’s involved in the mortgage loan approval process. However, once you learn about the requirements and necessary documents, you’ll realize that home loan approval isn’t that complicated. So, let’s take a look at house loan approval timelines and some tips to speed up the process.

Steps in the Mortgage Loan Approval Process

We can break down the process into seven steps, starting with an assessment of your financial situation. This allows you to find suitable mortgage options and then get pre-approved. Then, you should find an affordable home and choose a lender that can fund your mortgage. After submitting your application and paying the closing costs, you’ll get your mortgage.

We’ve covered this process in depth in a separate article; click on How to Get a Mortgage in Toronto to learn more.

Factors Influencing Mortgage Approval Timelines

The mortgage approval process in Canada takes some time, but the government has updated mortgage rules to address the issue. Some factors influencing the process are related to the lender, and some of them depend on your financial situation.

• Lender's processing speed: It depends on the number of applications or specific approval procedure.
• Complexity of financial profile: Self-employed applicants or applicants with unstable income may face delays.
• Credit history and score: Solid financial records and a high credit score (680 or above) can expedite the process.
• Property appraisal results: Any discrepancies in home appraisal value and the expected value can extend the home loan approval process.
• Mortgage type and amount: Larger mortgages or specialized loans can take longer to process.
• Document submission: Missing documents or delays in submission can put off the process.

Tips to Expedite Your Mortgage Approval

As mentioned above, some of the factors affecting the approval timeline depend on you. By following these tips, you can speed up the process on your part.

• Get pre-approved: Getting pre-approved shows the lender your determination and speeds up the process. Click to learn more about the Toronto Mortgage Pre-Approval Process.
• Organize financial documents: Make a checklist of required documents (e.g., tax returns, pay stubs, etc.) and prepare them.
• Maintain a good credit score: Avoid getting new loans and pay your bills on time.
• Choose a responsive lender: Try to work with lenders with efficient processing and high client satisfaction.
• Be proactive: Respond promptly to the lender’s request for additional information and other inquiries.
• Seek advice: Talk to a real estate agent and ask them to prep you for home loan approval.

Frequently Asked Questions

How long does mortgage approval generally take?

Mortgage approval can take 5 to 10 business days. You can keep it to a minimum by preparing the required documents in advance.

What happens after lender approval?

After getting approved, you will receive a mortgage commitment letter, which is followed by preparing the legal paperwork for closing.

How long after receiving a mortgage offer to complete?

Once you receive the mortgage offer, it takes 2 to 6 weeks to finalize the purchase.

How quickly can mortgage funds be released?

Mortgage funds are released on the closing date, which is set during the purchase agreement. The funds are typically released within three days of the closing date, given that all conditions are met.

How do you know if your mortgage has been accepted?

The mortgage commitment letter indicates whether your mortgage application is approved or denied.

The Bottom Line

You need to take seven steps to get mortgage loan approval in Canada. The home loan approval can take up to 10 business days. The timeline depends on how quickly the lender processes mortgage applications and how your financial situation is. However, you can accelerate the process by organizing your financial documents and improving your credit score. Also, getting pre-approved can reduce the timeline to a minimum.