Letter of Commitment

Common in the financial world, a letter of commitment is a document between two parties agreeing to certain terms. For example a letter of commitment to pay, is used to reassure the recipient that and agreed sum will be paid, or an outstanding debt will be settled – even if unforeseen circumstances have caused late payments.


If a businessman goes to a private financier and asks for a $10,000 loan, and the financier agrees, the financier will provide a letter of commitment outlining the terms. Similarly a mortgage lender will send a letter of commitment to the borrower ahead of transferring the loan.


Outside of finance a company may send a letter of commitment to somebody they’re negotiating a contract with, that states both parties understand the contract and are committed to the terms outlined. This is sometimes called a letter of intent. It is not an agreement that the contract will be signed, but that both sides are acting in good faith and wish to move forward.


Starting to Write


Don’t use generalizations or ambiguous language. In order to properly commit to something it has to be specific.


Clearly state the details of the loan or other agreement, such as the amount, terms and length of the contract.


List any conditions that have to be met for the commitment to be valid, such as the submission of documentation, and the passing of a credit check.


Sign the letter to confirm the commitment.

Sample Letters

Letter of Commitment from Lender Sample

Bill Bigelow

Bills Real Estate

Toronto, Ontario


Dear Bill,

As per our previously negotiated agreement, I commit to lending you and your business, Bills Real Estate, the sum of $500,000 over the next 30 days. It will be delivered in increments of $50,000 to the bank account specified in your loan request. If you need more money, I will loan you another $200,000 over the following 60 days in amounts that will be negotiated in the future. If I fail to make these loans to your business, I will pay the penalties laid out in our previous agreement.



Letter of Commitment for Mortgage Sample

Dear William Andrew Scott,

Homestead Mortgages Inc (HMI) is happy to announce that your application for your first mortgage has been approved. This loan will be reflected in a lien on the property listed above. For our commitment to go ahead you must meet all of the terms and conditions attached to this cover.


Our commitment is also subject to a final credit review and approval. HMI reserves the right to assess your credit, income, asset and employment information at any time, and may cancel the commitment if there is a significant adverse change to your circumstances. HMI may also cancel the commitment if information you have provided is found to be untrue or misleading.


If you have any questions or queries regarding anything enclosed, please contact your broker. Your broker must receive a signed copy of this letter within 30 calendar days.


LOAN AMOUNT: $250,000

TERM OF LOAN: 360 months




Homestead Mortgages Inc Approvals

Letter of Commitment for Contract Sample

Dear Mrs. Teller,

This letter is in regard to our previous negotiations and the terms and conditions outlined. Please take the time to carefully evaluate the enclosed information, and if you feel it accurately reflects said negotiations, return a signed copy to us. We will then start a first draft of the contract. Thank you for your continued cooperation.


Please note that this is a letter of commitment only, and is not intended to be legally binding nor a commitment to sign the actual contract.


Yours Truly,


Aryan Mosses

Aries Banking Corp

Letter of Commitment to Pay Sample

Dear Mr. Rodney,

Our agreement states that the outstanding balance of $3,000 should be settled by July 10, 2013, however due to extenuating circumstances concerning the bereavement of my husband, I am unfortunately unable to meet this obligation.


I am writing to inform you that I am still committed to paying this debt and would like to assure you that I can meet this commitment by September 01, 2013.  I therefore request that the settlement date be pushed back to September.


If you find this request acceptable, or you require any additional information, please don’t hesitate to contact me on the details provided.



Mrs. Miller