Stages of a Mortgage: 5. Loan Formalization
With the property appraised, the final loan terms still need to be locked in. This stage ends with the approval letter — the document that marks the final green light.
When it starts and when it ends
The loan formalization stage starts right after property appraisal is complete. It ends with the approval letter — the document that definitively confirms the final terms of your mortgage.
What gets decided at this stage
If pre-approval was an estimate based on your financial situation, and the appraisal confirmed the property's value, this stage brings the two together: the bank locks in the final financed amount, the term, the rate, the spread, and the associated insurance (life and multi-risk are usually required).
This is also the stage where you typically choose — or confirm — between a fixed, variable, or mixed rate, if you haven't already, and where the insurance tied to the loan gets contracted.
Why this stage can involve some negotiation
It's not unusual for terms to shift slightly between pre-approval and formalization — for example, if the appraisal came in lower than expected, or if you choose to bundle insurance from a provider other than the bank's. This is the stage to carefully review the approval letter before moving forward: it's the document that sets the terms you'll sign at the deed.
What happens next
With the approval letter in hand, only one step remains: the deed signing, the moment the loan is formally contracted and the property purchase becomes official.
