Once you’ve got mortgage pre-approval, the assumption for many is that their mortgage is in the bag, and that anything that might follow afterwards, couldn’t possibly jeopardise it. However, the reality is that no buyer can expect their mortgage pre-approval to immediately translate into a mortgage, as there are several factors the lender will want to consider before transitioning you from pre-approved, to approved.

Below are some factors related to the specific property you plan to buy, that can impact whether you gain mortgage approval:

The home’s value

When competing to purchase a property, multiple interested buyers can force you to bid much more than the market value, and as a result, your appraisal may be returned with a lower value than you’ve paid. Having additional financial resources to cover any shortfall is essential for gaining mortgage approval.

The condition of the property

You may struggle to be approved for a mortgage if you plan to buy a property in poor condition or with structural issues.

Property specifics

Some types of property that might prove challenging to a lender include log homes, properties on leased land, rural homes with a hint of hobby farming or properties containing asbestos, underground oil tanks or aluminum wiring for example.

The location of the home

Lenders may assume that you’ll need to buy a second home if your new property is a long way from your place of work, for example, and this can impute a ‘shelter cost’ and jeopardize your approval.

Buying a condo

For many reasons, some mortgage insurers do not want to lend against certain condo buildings, such as those that are small or which have extraordinarily high maintenance fees.

There are also some ways in which you could jeopardize your mortgage approval that have nothing to do with the property itself, and are more about you and your circumstances. For instance, failing to keep your taxes up to date, not paying your credit card bills on time, and deferring loan payments, are all things that can make a lender think twice before approving you for a mortgage.

How to give your mortgage the best chance of being approved

Once you’ve found a specific property that you’re interested in buying, try meeting with a local mortgage broker to get their perspective on how risky it might be, and whether there might be any mitigating circumstances that could jeopardize your application. Talk to them at length about the strength of your mortgage pre-approval, and take stock of your personal finances. Ask your broker where your debt service ratios are at, and whether your credit history and employment situation are still acceptable.

Gaining a mortgage pre-approval is certainly wise, but don’t assume that it ends there and that you’ll automatically be approved for the mortgage that you want. Talk to your realtor about the property you plan to buy, and to your broker about anything that might put your application at risk. Once you’ve looked at everything in more detail, you’ll be able to make a more informed decision as to whether to proceed with your offer to purchase.