The 3 Types of Mortgage Preapprovals: Which One Protects You Best?
#21

The 3 Types of Mortgage Preapprovals: Which One Protects You Best?

In this episode of The Wisdom, Lifestyle, Money Show, host Scott Dillingham explains the three types of mortgage preapprovals and their implications for buyers in Windsor's hot market.

Scott breaks down verbal preapprovals: Quick phone estimates based on self-reported info, inaccurate due to unverified income, debts, and credit—only useful as rough guidelines, not for firm offers.

He discusses calculator-based or rate-hold preapprovals: Often just locking rates (90-120 days) without full review, commonly mistaken for approvals but stating "no approval implied"—better with documents but still risky without underwriting.

The ideal is fully underwritten preapprovals: Involves submitting job letters, pay stubs, T4s/T1s, and financials for lender review (1-2 days), verifying income (e.g., bonuses, add-backs for self-employed) and credit for accurate approvals—protects against discrepancies.

Scott warns of risks in competitive markets like bidding wars without conditions, sharing stories of declines due to property issues or unverified docs, and advises always providing paperwork upfront.

For self-employed/commission earners: Lenders use post-expense income, allowing add-backs (e.g., home office, vehicles) with 2-year history—crucial for accuracy.

In 2025, Canada's mortgage market sees Bank of Canada cuts to ~2%, easing rates (variables at 4-5%) amid 2M+ renewals, but rising prices offset by job/income growth and relaxed rules—boosting preapprovals for first-timers in buyer's markets, per CMHC and TD Economics.
This episode empowers buyers to seek fully underwritten preapprovals for safety, highlighting common pitfalls and lender tricks in Ontario's 2025 economy.

Guest Bio 
Scott Dillingham is the host of The Wisdom, Lifestyle, Money Show and founder of LendCity Mortgages in Windsor, Ontario, specializing in home and investment financing. With banking and brokerage experience, Scott educates on preapprovals, emphasizing accuracy and client protection. Passionate about empowering buyers, he shares practical insights from real scenarios. Connect with Scott at lendcity.ca, call 519-960-0370, or tune in for more financial guidance.

Key Takeaways
  • Verbal preapprovals: Phone-based estimates using self-reported data—ignore unverified factors like Beacon scores, debt calculations (e.g., 3% min on cards), and non-usable income (e.g., one-time bonuses, COVID relief)—treat as ballparks only, not for cash offers.
  • Calculator/rate-hold preapprovals: Locks rates (90-120 days) via basic inputs, often without docs—documents "no approval implied," risky for discrepancies; bring paperwork for better accuracy, but still not fully reviewed.
  • Fully underwritten preapprovals: Submit job letters, pay stubs, 2-year T4s/T1s, financials—lenders review (1-2 days) for verified income (e.g., 2-year bonuses/OT, self-employed add-backs like home office/vehicles), credit, and approval—safest for competitive markets.
  • Risks without proper preapproval: Nightmares like declines after firm offers due to unverified income or property issues (e.g., bad foundations, knob-tube wiring)—could require costlier construction loans.
  • Self-employed/commission tips: Lenders use post-expense income; provide T1 generals for add-backs (e.g., cell phones, cars) with 2-year history—some allow gross-ups or exceptions.
  • Market advice: In hot areas like Windsor, avoid firm offers without underwriting; post-approval risks mainly property-related—lenders verify employment pre-closing.
  • Lender tricks: Ask if preapproval is fully underwritten; verbal/calculators mean little—protect against surprises by supplying docs upfront.
  • 2025 context: BoC cuts to ~2% ease variables (4-5%), but rising prices/renewals; job growth/relaxed rules aid first-timers—prioritize accurate preapprovals.
Resources and Links
Call to Action 
If Scott Dillingham's guide to the three preapproval types in 2025's easing rate market helps you navigate Windsor's bidding wars safely, apply at lendcity.ca or call 519-960-0370 for a fully underwritten review. Share this episode with potential buyers facing renewals—tag us on social media! What's your preapproval experience? Leave a review on Apple Podcasts or Spotify to help others discover 2025 mortgage trends, self-employed tips, or protection strategies. Tune in next week for more on smart home financing.
  • (00:12) - Types of Pre-Approvals Explained
  • (01:36) - The Verbal Pre-Approval Dangers
  • (05:46) - Understanding Rate Hold Pre-Approvals
  • (08:19) - The Fully Underwritten Approval Advantage
  • (13:51) - Risks of Going In Firm
  • (16:39) - Importance of Document Collection

Here are the top three ways I can help you:
  1. Gain Access To Your Weekly Investor Insight
  2. Book A Strategy Call With An Expert On The Team
  3. Access Our Investor Resources
Please follow and Rate us 5 stars because it helps us so much!