The importance of having your financing in place when you make an offer to buy
By Joseph Marovitch
Updated October 29, 2026
When purchasing a property, one must either obtain a mortgage or pay cash in full. To save time and avoid financing issues, it’s wise, and often necessary, to provide proof of cash or a pre-approval with a promise to purchase. These items help the buyer get the best price possible and give them an advantage over another buyer without financing in place. Sellers want buyers who can pay.
Proof of cash
This is easy to obtain and is both necessary and legally required if the buyer is paying in full with cash. The buyer simply requests a letter from their financial institution stating they have sufficient funds to purchase the property. Another option is to provide a recent bank statement. The letter does not have to state a specific amount; however, it should mention the property and asking price. This letter makes the seller much more at ease and confident the sale will go through. It also quickly satisfies the finance condition.
To save time and avoid financing issues, it is both wise and a must to either provide proof of cash or a pre-approval with a promise to purchase.
Pre-approval
A pre-approval from a recognized financial institution is an extremely useful tool when searching for a property. In a promise to purchase with a pre-approval, a buyer indicates partial proof of financing. It takes approximately thirty minutes at the bank with a mortgage broker and determines the following:
– How much the bank is willing to lend the buyer
– An interest rate that can be secured for up to 120 days
Note: there is a second step to pre-approval, where the bank will want to know whether the property being purchased is the same value as, or higher than, the purchase price through an appraisal. Always check a buyer’s pre-approval for conditions, too. Banks will provide pre-approvals based on verbal information without verification. Therefore, the pre-approval without verification may not be very useful.
The pre-approval provides several advantages, including:
A secured interest rate, which ensures that:
– If rates increase, you will still have the lower secured rate.
– If rates decrease, you receive the lower rate.
– Sellers are more willing to accept a lower offer from a buyer with a pre-approval than a buyer with a higher offer but no financing in place.
Budget
Knowing the bank is prepared to lend up to a specific amount, the buyer knows the budget they must work with, which makes it easier for the broker to negotiate with the seller.
Sellers are more willing to accept a lower offer from a buyer with a pre-approval than a buyer with a higher offer but no financing in place.
Process
Step 1
- Meet with a mortgage broker
- Provide social insurance number
- Identification
- Last pay statement, if possible
- Proof of assets
- The mortgage broker checks your credit history and rating.
- The mortgage broker then indicates if they can lend and how much.
- The buyer receives a Mortgage Pre-Approval document stating they are approved for a specific amount, at what rate, and for what term (used in an offer).
- It is best to submit the unconditional pre-approval with the promise to purchase.
Step 2
- Once the offer is accepted, the bank will evaluate the property to confirm it is worth the amount stated by the vendor.
- After a successful evaluation, the bank will provide a document titled Final Mortgage Approval.
Upon receipt of the Final Mortgage Approval, the financing condition is deemed satisfied.
These articles provide a summary. If you have questions, comments, or would like to discuss further, please refer to the comments section at the bottom of the page or contact me directly. As well, to view past articles, click here.
State of the market
We are in interesting times. As anticipated, the Bank of Canada has raised the prime lending rate by a quarter point to 2.5% because of rising inflation. The Bank of Canada expects further rate hikes and projects inflation could rise to 3.1% due to ongoing conflict, current US/Canada relations, and various local political factors. These issues slow the supply chain for materials and transportation needed to build and/or renovate property. In turn, material prices rise along with all other goods and services.
These conflicts are driving inventory up and buyers to hesitate. This is a rare anomaly since more supply usually means lower prices and more sales in a buyer’s market. However, buyers are on hold as they wait for more news on the U.S. midterms, Quebec politics, and a possible upcoming referendum. These issues create economic uncertainty, and investment money always flows where stability is.
These conflicts are causing inventory to rise and buyers to hesitate. This is a rare anomaly since more supply usually means lower prices and more sales in a buyer’s market.
However, conflict always presents opportunities. Opportunities carry risk, but you can mitigate it, if not eliminate it altogether.
Opportunities include: purchasing at lower prices and better terms with less competition, experiencing increased value in property as pent-up demand is released when markets balance out, investing in income property at lower prices and higher cap rates, using corporations, insurance tools and borrowed funds against one’s own insurance policy to purchase property while protecting assets against creditors.
Till next week, take care and have a wonderful weekend.
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Joseph Marovitch has worked in the service industry for over 30 years. He was first director of Camp Maromac, a summer camp for children, before becoming a real estate broker, where he applies the same values of reliability and integrity. You can reach him at 514 825-8771 or at josephmarovitch@gmail.com
