Pre-Approval for a Mortgage
Shopping for a new home? Start by getting pre-approved.
With a pre-approval, you’ll know how much you can spend and we can easily estimate your monthly payments after helping you select the right mortgage with the right features. Armed with your pre-approval, you can go into your home search with confidence.
What is a pre-approval?
Pre-approval means that you go through some of the steps necessary to get a mortgage without actually borrowing the money. In fact, you are under no obligation to borrow money and there is no cost for a pre-approval. You are simply allowing our Mortgage Specialist to go through the first steps of qualifying you for the amount you want to borrow and learning about the various types of mortgages and how they work. We’re here to explain your options and answer any questions you have as you begin the journey to find your new home.
With some exceptions, the amount you can borrow and your interest rate will be guaranteed for 120 days.
If you find a home in your price range within the pre-approval period, all conditions have been met and there have been no changes to the information you provided, finalizing your mortgage will be easy.
If you don’t find a home you like after 120 days, the pre-approval will expire and we’ll create a new one based on the interest rates at that time.
We make pre-approval fast and easy
You don’t have to be a Meridian Member to get pre-approved for one of our mortgages. To get started, just stop by a Meridian branch, give us a call, apply online, or make an appointment with one of our local Mortgage Specialists.
What you need for pre-approval
If you’re a Meridian Member, we’ll have some of your information already on file. If you’re not a Member, no problem. We’ll be happy to welcome you. Either way, here’s a checklist of the details we’ll need to get your pre-approval started.
- Photo ID: This can be your driver’s license, passport, or other government-issued ID with your address and photo
- Employment details: If you work full time and receive regular income, we’ll need your most recent paystub and a T4. If you have changed jobs since you were last issued a T4 Slip, a letter from your employer stating how long you’ve been with the company and a recent paystub (within 60 days of application) is enough to start the process. If you are self-employed, please bring your two most recent income tax returns and Notices of Assessment (NOA). Tip: You can download your Notice of Assessment (NOA) from the Canada Revenue Agency website by creating a MyCRA account. For other types of income, such as seasonal, commission-based, or self employed, talk to one of our Mortgage Specialists, who will be happy to help
- Bank statements: You’ll need to confirm that you have enough money to cover “closing costs”. These are the legal and administrative fees that all homebuyers are required or recommended to pay before and after the transaction is completed. You should plan for about 1.5% to 3% of the purchase price to cover closing costs.
- A list of assets and current debt: Confirm your net worth by providing examples of assets that you currently own. These could include bank account balances, investments or other properties.
The amount of money you owe today for loans or credit balances affects how much money you can be pre-approved to borrow. If you reduce your debt while you are house shopping, you may qualify for a higher mortgage when it’s time to finalize the paperwork.
How much will you be able to borrow?
Once we have all your information, a Meridian Mortgage Specialist can determine how much you can borrow. To do this, we apply the following tests:
Gross Debt Service Ratio
No more than 32% of your gross annual income should go to paying your annual shelter costs (mortgage principal and interest costs, plus property taxes, heating costs and if applicable, 50% of condo fees).
Total Debt Service Ratio
No more than 40% of your gross annual income should go to paying your annual shelter costs plus all of your other household expenses including credit card, line of credit and loan payments.
Canada Stress Test
The Government of Canada’s mortgage stress test is designed to answer the question, “Could you still afford to pay your mortgage if interest rates went up?”
Important: In some cases your Meridian Mortgage Specialist will consider ratios up to the industry standard maximums of 39% GDS and 44% TDS.
More flexibility with Meridian
We agree that the stress test is a good way to protect you from borrowing more than you should. However, because we're a provincially regulated financial institution, we have more flexibility when it comes to the mortgages we offer and approve. So, even if you don't pass the stress test, we can look at factors like income appreciation, accelerated payment options, and principal reduction to find a way for you to afford your dream home.
When you find your dream home
Once you have a pre-approved Meridian mortgage, you can shop with confidence and be ready to make an offer on the home of your dreams. Once the offer is accepted, here's what we'll need to finalize the paperwork.
- A copy of the listing, including the full address
- A copy of the signed Purchase Offer
- Confirmation that your financial situation is still the same
- The name and address of your Lawyer or Notary