The Importance of a Pre-Approval

Tracy Head • June 2, 2023

The subject of mortgage pre-approvals has been beaten to death, but I am going to circle back to this

from a different perspective.


Over the last few months I’ve run into several situations where clients have reached out with an

accepted offer in hand but have not done their homework with respect to arranging their financing.

Sometimes this is not an issue, but sometimes it is. For everyone involved in a real estate transaction there is a fair bit at stake.


For your realtor, there are countless hours spent preparing and taking you to listed properties. This can involve hours and hours, sometimes over many months, of research, coordination, and travel. When you do find a property that you want to write an offer on your realtor spends a great deal of time preparing and negotiating your offer.


For the listing realtor, there is time spent back and forth with their client and the realtor representing

the potential purchasers in addition to the time they have already spent working with the sellers getting ready to list their home.


For both realtors there is much that goes on behind the scenes to make an offer come together.

Once a seller has an accepted offer, their home is tied up while they wait to see if you have your

financing approved. They may already have an offer on another home so are making plans and spending money on inspections and appraisals for their own potential move. They are also likely excited about their upcoming move and are spending time coordinating everything from new schools or daycare to home insurance and utility hookups.


There is you. You have spent hours watching Realtor.ca and scouring listings to find your next home. You have explored potential neighbourhoods and spent days checking out possible homes. You have made arrangements to move and are excited about the home you’ve found. Then there is your mortgage person. I love what I do, and feel a great deal of satisfaction when I can find a lender for a complicated situation.


Complicated situations take hours and hours of time and research to find suitable (and palatable)

solutions.


Each application and client is slightly different, and lenders have adapted to offer a wide range of

mortgage products to suit most situations.


However, sometimes just because we are able to find a mortgage approval for you does not make it

wise to move forward with a purchase.


Lenders have different criteria and programs. Most are looking for a few basics to be in place:

  • Are you working consistently?
  • Have you paid your previous credit facilities on time and as agreed?
  • Do you have a down payment organized?


Now, mortgage options can change based on the answers to these questions.


There are a few other things that are important:

  • Have you been bankrupt in the past? Are you discharged from your bankruptcy?
  • Do you have any spousal or child support payments?
  • If your income is casual or commission-based, do you have a two-year history?


If you have not done your pre-work and its been a while since you last applied for a mortgage you may be shocked to learn that you don’t qualify for as much as you used to. You might be horrified to know that even with twenty per cent down the only option we can find is a private lender. You may not be able to wrap your head around the fact that your financing team cannot find a suitable option because of a written-off fine that you thought was not big deal.


It is heartbreaking to learn that you don’t qualify for the mortgage you need. I cannot stress enough the importance of doing your homework to have your financing lined up before you start shopping. I also cannot stress enough the importance of full disclosure with your mortgage person. Sharing any of the skeletons in your closet can help us get ahead of any problems they may cause.


I really take it to heart when I can’t find a suitable option for good people. I want to set my clients up for long-term success and make sure I am not setting them up for disaster or disappointment.

I do love spending as much time as needed educating my clients and helping them prepare so that when they are ready to move forward we find a great mortgage product for them. On a different note – if you are a home owner you should have your 2023 tax bill by now. Make sure you read the form and claim your Home Owners Grant.


If this is your first year in your home and your lender is collecting your property taxes for you, check the upper right corner of your tax notice to make sure it shows your lender. If not, reach out to your

mortgage lender (or broker if you worked with one) to make sure the lender is paying your property

taxes as agreed. Every once in a while there is a disconnect and it is far easier to sort out ahead of time

as opposed to when you get a notice in August that your property taxes are owing.

Tracy Head

Mortgage Broker

GET STARTED
By Tracy Head • October 28, 2026
If you are self-employed you know the drill. You work hard, take care of your customers, pay your bills and try to keep as much of your money as possible. When tax time rolls around, you sit down with your accountant and look for every legal way to lower your taxable income.  It makes sense. Why pay more tax than you have to? But there is a catch that many business owners do not think about until they are ready to buy a home. The same tax returns that help you save money can make it harder to qualify for a mortgage. I have seen this issue come up time and again with self-employed buyers. They run good businesses, have money in the bank and can easily afford the monthly mortgage payment. Yet, when a traditional lender reviews their tax returns, the income on paper may be too low to qualify. The good news is that there are options. The important thing is to understand them before you start shopping for a home. Not all mortgage lenders see income the same way. When most banks review a mortgage application, they want to see your personal tax returns, Notices of Assessment and other records. They usually focus on the income you report after business expenses, not the total amount your business brings in. For a self-employed person, that number can be misleading. Take a contractor who brings in $180,000 a year but claims business expenses that leave $65,000 in taxable income. The contractor may have plenty of cash to cover a mortgage payment, but the bank may qualify them using a much lower income figure. That does not mean the bank is wrong. It means the bank is working with the numbers it can prove. The key is knowing that traditional banks are not the only option. Some mortgage programs are designed specifically for people who own businesses and do not show their full earning power on a tax return. Option 1: Insured Stated-Income Mortgages One option worth exploring is an insured mortgage program for self-employed buyers. These programs may allow a lender to use a reasonable estimate of business income, supported by other records, instead of relying only on the income shown on personal tax returns. Despite the name, “stated income” does not mean you can pick a number out of thin air. The lender and mortgage insurer still need to see that your income makes sense for your type of business. They may look at how long you have been in business, your bank statements, business revenue, credit history and the size of your down payment. Some programs also allow certain business expenses to be added back when calculating qualifying income. The big advantage is that you may be able to get a mortgage through a traditional lender without paying the higher rates and fees that often come with alternative financing. There are limits, of course. Not every business or borrower will qualify, and the lender must follow the insurer's rules. You should also expect to provide paperwork to support your application. Still, this is often one of the first options I would investigate for a self-employed buyer who wants to keep borrowing costs down. Option 2: Alternative Lenders and Bank Statement Programs What happens when your tax returns do not work, and an insured program is not a fit? This is where alternative lenders can help. These lenders often look beyond your personal tax return and take a closer look at how money moves through your business. One approach is a bank statement program. The lender may review six to 12 months of business bank statements to see how much money comes in. It then estimates how much of that money is available to support your mortgage payment after business expenses. For example, imagine a business has $240,000 in deposits over a year. A lender might apply an expense allowance based on the type of business and use the remaining amount to estimate qualifying income. The actual calculation varies by lender, and not every dollar deposited counts as income. A lender will also want to understand where the money comes from. Transfers between accounts, borrowed funds and other deposits that do not come from business sales may not count. The advantage is simple: the lender can get a better picture of your business cash flow, even if your taxable income is low. The downside is the cost. Alternative mortgages often come with higher interest rates, lender fees and stricter rules about the down payment. Depending on the lender and your situation, you may also have fewer mortgage products to choose from. These mortgages can make sense when they help you buy a home you can comfortably afford. But they should be chosen with a plan, not simply because they are the easiest approval to get. The tax savings versus mortgage costs is where things get interesting. Most business owners want to reduce their tax bill. That is understandable, and there is nothing wrong with claiming legitimate business expenses. The problem comes when tax savings today create a bigger financing cost tomorrow. But here is something many self-employed buyers overlook: paying more income tax just to qualify for a traditional mortgage is not always the best financial move. Let's say you save several thousand dollars in income tax by claiming legitimate business expenses. A year or two later, you want to buy a home, but your reported income is too low to qualify with a regular bank. You may now need an alternative mortgage with a slightly higher rate and an upfront lender fee. At first, that might sound like a bad deal. But when you compare the actual costs, it may be the better option. Consider a $600,000 mortgage. If an alternative lender charges an interest rate just one percentage point higher than a traditional lender, the difference would be about $6,000 in interest over a year if the full balance stayed at $600,000. In practice, the difference will change as you make payments and your mortgage balance declines. Now compare that cost with the extra income tax you might pay by reporting a higher taxable income. Depending on your business expenses, tax bracket and province, the additional tax bill could be substantial. You could end up paying more in taxes than you would have spent on the higher mortgage rate and lender fees. Of course, you need to run the numbers carefully. Alternative mortgages can come with lender fees, legal costs and penalties if you refinance too soon. The rate difference may also change over time, and there is no guarantee that you will qualify for a traditional mortgage later. The point is that paying more tax is not automatically cheaper than paying a little more for your mortgage. In some cases, keeping your legitimate business deductions and using an alternative lender can leave you in a stronger financial position. The best approach is to compare both options before making a decision. Ask your accountant to estimate the extra tax you would pay if you reported more income. Then ask your mortgage broker to calculate the full cost of an alternative mortgage, including interest, fees and any expected refinancing costs. You may find that paying a modest premium for your mortgage is a better deal than giving up valuable tax deductions. The goal is not to avoid taxes at all costs, nor is it to qualify for a mortgage at any cost. It is to look at the whole picture and choose the option that leaves more money in your pocket over time. If buying a home is on your radar in the next one to three years, it is worth having a conversation with both your accountant and a mortgage broker before making major decisions about how you report your income. Ask your accountant to explain the tax savings from your current approach. Then ask a mortgage broker to estimate what you could qualify for under different lending options. You may discover that a traditional mortgage is still within reach. Some lenders can make reasonable adjustments for certain business expenses, and insured self-employed programs may offer more flexibility than you expect. If those options do not work, a bank statement mortgage may be a sensible short-term solution. In that case, ask what it would take to move to a lower-cost mortgage later. That could mean building a stronger income history, improving credit, paying down debt or waiting until your tax returns better support the mortgage you need. Most importantly, do not wait until you have found your dream home to start figuring this out. The bottom line is that being self-employed should not mean you have to pay more for a mortgage than necessary. But the way you manage your business finances can affect the choices available to you when it is time to buy a home. Saving tax is important. So is keeping your financing costs under control. The goal is not to pay the most tax or the least tax. It is to make informed decisions that work for your business today and your plans for tomorrow. A little planning can make a big difference. And when it comes to buying a home, knowing your options before you need them is one of the smartest moves a business owner can make. Important note: Mortgage programs, insurer rules, rates and fees change from time to time. This column is for general information, not personal tax or mortgage advice. Confirm current program requirements with your licensed mortgage professional and discuss tax decisions with your accountant.
Three people in a meeting across a desk, with papers, a laptop, and a glass of water in a bright office.
By Tracy Head • October 15, 2026
When you’re buying a home or renewing your mortgage, choosing a lender is one of the biggest financial decisions you’ll make. Many Canadians start with their bank because it’s familiar. They may have their chequing account, savings, and credit cards all in one place. It seems like the natural place to get a mortgage, too. After years of helping clients find the right mortgage, I’ve learned that the best choice isn’t always the biggest bank. That’s why I often work with monoline lenders to help my clients find a mortgage that fits their needs. What Is a Monoline Lender? A monoline lender is a company that focuses mainly on mortgages. Unlike traditional banks, monoline lenders don’t offer everyday banking services such as chequing accounts, credit cards, or car loans. Instead, they focus on one main job: providing home financing. Many monoline lenders work through mortgage brokers rather than dealing directly with customers. This means I can compare their mortgage options with those of banks and other lenders to help find a suitable fit for each client. You may not recognize the name of a monoline lender, but that doesn’t mean it’s a small or risky operation. Many are well-established companies that serve homeowners across Canada. One of the biggest reasons I work with monoline lenders is their focus on mortgages. Because mortgages are their main business, they often offer competitive interest rates and mortgage features that can be very attractive to borrowers. Even a small difference in your interest rate can make a difference over time. But I always remind my clients that the lowest rate isn’t the only thing that matters. The mortgage also needs to work with their budget, plans, and comfort level. Here are some of the advantages I see when working with monoline lenders: 1. Competitive interest rates Monoline lenders often offer very competitive rates, sometimes lower than those offered by the big banks. This can help reduce borrowing costs over the life of a mortgage. 2. Mortgage terms that put borrowers first Some monoline lenders offer flexible mortgage features, including helpful options for making extra payments or paying off a mortgage early. Their prepayment rules and penalties can also be more favourable than those of some bank mortgages. However, every lender and mortgage product is different, so I always look at the details before making a recommendation. 3. A focus on mortgage service Since monoline lenders specialize in mortgages, their processes and support teams are built around home financing. As a mortgage broker, I work with their lending teams to help move applications forward and deal with questions along the way. 4. More choice for my clients I believe my job is to look beyond the name on the building. By working with different types of lenders, I can compare more options instead of limiting my clients to what one bank offers. That extra choice can be especially helpful for first-time buyers, families renewing their mortgages, and homeowners who want to make the most of their money. Of course, no lender is perfect, and monoline lenders are no exception. One difference is that you generally won’t have a branch to visit for your mortgage. You may need to contact the lender by phone, online, or through your mortgage broker. For people who prefer face-to-face service at their local bank, this can take some getting used to. You also won’t be able to keep your everyday banking and mortgage with the same monoline company. Some people prefer having everything in one place, and that convenience has value. Another important point is that mortgage features can vary widely. Some monoline mortgages have excellent prepayment options, while others may have limits or conditions. Penalties for breaking a mortgage early can also vary, especially with fixed-rate mortgages. That’s why I encourage clients to read the terms carefully and ask questions before signing. A low rate is only a good deal if the mortgage suits your needs. How Do Monoline Lenders Compare With Traditional Banks? Traditional banks have plenty to offer. They provide familiar service, a wide range of financial products, and the convenience of managing several accounts under one roof. Some also offer discounts or benefits when you combine your mortgage with other products. Monoline lenders, on the other hand, focus on mortgages and may offer better rates or more suitable mortgage terms for certain borrowers. Neither option is automatically better. The right choice depends on your financial situation, your plans, and the mortgage details. This is where working with a mortgage broker can make a real difference. We can compare options from different lenders, explain the differences in plain language, and help you understand what you’re agreeing to. My Advice: Look Beyond the Name After years in the mortgage business, I believe that choosing a mortgage should be about more than finding the lowest rate or going with a familiar name. It should be about finding a mortgage that gives you good value, fits your budget, and offers the flexibility you may need in the future. That’s why I often recommend monoline lenders. They give me more options to consider and can provide excellent mortgage solutions for many Canadian homeowners. Most importantly, I want my clients to feel informed and comfortable with their decision. A mortgage is a major commitment, and you deserve to understand your choices before making it. Whether your mortgage is with a major bank, a credit union, or a monoline lender, the goal remains the same: to help you find the right fit for your life, not simply the first option put in front of you. The best mortgage isn’t always the one with the most familiar name. It’s the one that works best for you.