Once a lender has approved your application, valuation and paperwork, it issues a mortgage commitment letter. This is the formal offer. It sets out the loan amount, interest rate and how it can change, the term, monthly payment, fees, the security to be taken, required insurance, and the conditions that must be met before money is released. It is sometimes simply called a letter of commitment or loan commitment.
Signing and returning the letter, often with a commitment fee, accepts the offer. The letter usually has an expiry date, so delays on the buyer’s or seller’s side can mean having to seek an extension. The buyer’s attorney and the seller’s attorney rely on it: it is the evidence that financing is in place, and it typically leads to the lender issuing a letter of undertaking for the balance of the price.
Read the conditions closely. Common ones include clearing other debts, providing proof of the deposit, satisfactory title, completion of repairs flagged in the valuation, and life and property insurance with the lender’s interest noted. A conditional commitment is not yet a guarantee of funds; if a condition cannot be met, the lender may withdraw. A seller will usually expect the buyer to produce the letter within a period set in the agreement for sale.
Related terms: Letter of Commitment, Conditional Commitment, Commitment fee, Letter of Undertaking, Mortgage Valuation Report, Agreement for Sale.
Accurate as at October 2026.
