Picture of Ghummaz Bhatti

Ghummaz Bhatti

How a Mortgage Preapproval Insures You against Higher Rates

Fixed mortgage rates are continuously witnessing hikes from banks and lenders in the past months. Experts predict this to go on for the next years, but alarms are being raised for its potential to occur sooner than what has been expected. 

A mortgage preapproval may help you with this situation. In this article, we will discuss its importance amidst the rising mortgage rates. Read on. 

Interest Rates

The hike in interest rates heavily affects mortgage preapprovals. A mortgage preapproval gives you an estimate of the lender’s borrowing power and offers you an interest rate hold for a maximum of 120 days in most cases. When rates were either steady or declining, people did not pay much attention to their preapproval rates. However, this preapproval price has become a considerable factor in these times of rate hikes. 

A rate increase may favour you if you obtain preapproval for a fixed-rate mortgage. This is because your lender will honour the preapproval rate as long your mortgage funds remain valid during preapproval. 

Property buyers with preapproved fixed rates are able to complete their purchases more quickly and seamlessly compared to those with uninsured mortgages. 

Variable-Rate Mortgages

Getting preapproval for variable-rate mortgages can still be beneficial for you. Your rate will be expressed as a discount to your lender’s prime rate. 

Do not hesitate to take advantage of this option since variable-rate mortgages can be easily obtained these days. Although the payment will be affected by a change to the prime rate in most cases, there are also lenders that offer this type of mortgage that keeps the payment constant regardless of any change. 

This option ensures that you have enough cash flow until your renewal date and that more money can go to the interest instead of the principal when rates rise. Variable-rate mortgages are becoming more popular among home buyers and owners who are keen on maintaining their cash flows. 

The Benefits of Mortgage Preapproval

  • You can have protection against higher rates. If rates fall, you are still considered a free agent and benefit from the lower rates.
  • You are made aware of your borrowing power. This helps you be more prepared for expenses you may need to purchase a home.
  • Your credit will be checked for the process. This is not always done, so it’s best to ask your lender or mortgage agent. While this process does not guarantee approval, it is still an excellent opportunity to gauge if the numbers on your credit report match the property you are eyeing. After all, you do not want to be disappointed in the end when you find out you have been looking into a property that is beyond your budget. 


Not a lot of bankers and brokers offer mortgage preapprovals. They often view this process as a waste of effort and time since market rates can be tricky at varying times. 

However, a mortgage preapproval can bring tons of benefits to make your property purchase a success. This is why we recommend choosing agents who can help you with a mortgage preapproval, especially now that rates increase now and then. Having as many options as possible when purchasing a property is what you should aim for.

If you are on the lookout for mortgage services in Ottawa, turn to Ottawa Mortgage Services. We provide mortgage agent services for first-time homebuyers, self-employed individuals, and commercial clients. Apply now!

Contact Ottawa Mortgage Services to learn more

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