A pre-approval is a starting point—not a promise to fund
The Financial Consumer Agency of Canada says a pre-approved amount is the maximum a buyer may receive and does not guarantee a mortgage for that amount. BCFSA likewise warns that a pre-approval reflects the buyer’s circumstances at the time and that financing may still be denied if those circumstances change or the lender does not support the purchase price.
Final approval normally begins only after the lender receives the accepted contract and property details. The lender may then update the credit review, verify documents, assess the property, obtain an appraisal and—when required—submit the application to a mortgage insurer.
Borrower changes can break the original calculation
New debt, reduced income or weaker credit can change the debt-service calculation after an offer is accepted. A new vehicle loan, larger credit-card balance, line-of-credit advance, missed payment, job change, reduced hours or an unexplained change in self-employment income can all require the lender to reassess the file.
Federally regulated lenders currently qualify most borrowers using the higher of the mortgage contract rate plus two percentage points or 5.25%. A change in the offered rate, mortgage amount, debts or verified income may therefore affect qualification even when the purchase price has not changed.
- Do not open new credit or finance a vehicle before completion without lender approval
- Do not change employment structure, hours or compensation without discussing the effect
- Keep every payment current and avoid increasing revolving balances
- Tell the lender immediately about any material financial change
The down payment and closing funds must be verified
CMHC advises buyers to document the source of the down payment, recent account history, debts and the property being purchased. Missing statements, unexplained deposits, funds that arrive too late, an unapproved gift or borrowed money described as savings can delay or derail approval.
The deposit already paid is only part of the buyer’s cash requirement. The lender may also need evidence of the remaining down payment and enough money for closing costs. Property transfer tax, legal or notarial fees, adjustments, inspection, appraisal and insurance should not be assumed to come from money already committed to the minimum down payment.
The lender must approve the property as collateral
A strong borrower can still face a decline if the property does not meet the lender’s standards. FCAC notes that lenders verify the property before approving the loan, and CMHC explains that the property’s supported value affects the mortgage amount available.
An appraisal below the purchase price can create a cash shortfall because the lender may calculate the loan from the lower supported value. Other concerns can include property condition, marketability, use, zoning, leasehold terms, a very small unit, incomplete construction, environmental issues or an insurer’s refusal. For a strata property, building condition, insurance, litigation, special levies or other project-level risks may also affect lender acceptance.
Conditional approval is not the same as all conditions satisfied
A lender may issue an approval that still requires an appraisal, employment confirmation, proof of funds, insurer acceptance, satisfactory strata documents or other documents. Buyers should ask for the complete written list and confirm which items remain outstanding before removing the financing subject.
Rate holds also expire, and a lender’s product or underwriting policy can change. Reconfirm the rate, mortgage amount, payment, amortization, conditions and completion date in writing. For presales and long completions, the financing must be reviewed again closer to completion; an early qualification is not a guarantee months or years later.
Use a financing subject that matches the actual risk
BCFSA describes a financing subject as protection that allows a buyer to proceed only if financing can be secured by the stated deadline. It also warns that a subject-free buyer may discover that a pre-approval was not final, potentially risking the deposit and a seller claim if the buyer cannot complete.
The wording and timeline should reflect the buyer, lender and property. A short subject period is not useful if the lender cannot complete the appraisal and document review. Removing the subject should be based on written confirmation and professional advice—not only a verbal statement that the file looks good.
Apply the checklist to Greater Vancouver purchases
In South Delta, financing can change when a buyer moves from a Tsawwassen condo to a Ladner townhome, a non-strata duplex or a detached property with a suite. The lender may treat property type, rental income, warranty status, strata obligations and appraisal evidence differently. William coordinates the contract, documents and due-diligence timeline, while the lender decides the mortgage and the lawyer or notary advises on legal risk.
In Vancouver and Richmond, buyers should be especially careful with leasehold interests, small condos, presales, assignment transactions, buildings facing major work and purchases near an insured-mortgage price threshold. The safest approach is to have the lender assess the actual property and provide the outstanding-condition list before subject removal.
A practical before-subject-removal checklist
Before removing the financing subject, confirm the following items with the professionals responsible for the transaction.
- Accepted contract, amendments and MLS information delivered to the lender
- Income, employment, credit and debts reverified where required
- Deposit, down payment and closing funds fully documented
- Appraisal and property review completed or explicitly addressed
- Mortgage insurer acceptance confirmed when insurance is required
- Every lender condition listed and satisfied in writing
- Rate, mortgage amount, payment, amortization and completion date confirmed
- Buyer understands the contractual and legal consequences of subject removal