In the world of mortgage lending, a mortgage commitment and intent to lend are two very different terms. Understanding this difference is crucial for anyone in the process of obtaining a mortgage loan.
A mortgage commitment is a written agreement by a lender to lend the money and fund the deal by a specific date. This agreement indicates that the lender has reviewed the borrower’s financial situation and credit history and has agreed to the loan under a specified set of terms and conditions.
Generally, a mortgage commitment with contain the following information:
- mortgage loan amount
- interest rate
- repayment schedule
- funding date
- commitment expiry date
Intent to lend is much simpler.
An intent to lend is a simple statement by the lender that they are considering providing a loan for the subject property. However, this statement is not legally binding!
The lender may also decide to give intent prior to reviewing the borrower’s overall financial situation.
It is important to note that an intent to lend does not have a Funding Date or commitment expiry date. Generally, intent is common for large deals where the money is intended upon providing a commitment once certain aspects are disclosed. These are more commonly used during the pre-approval process.
