Updated September 2026
The mortgage is where most home purchases succeed or stall. Here are nine mistakes we see buyers make in Ontario, and how to avoid them.
1. House hunting before you are pre-approved
A pre-qualification is a quick estimate. A pre-approval means a lender has looked at your income, debts and credit, and usually holds a rate for a set period, often 90 to 120 days. Get pre-approved before you start seriously looking so you know your real budget and can move quickly.
2. Forgetting the stress test
Federally regulated lenders have to qualify you at a higher rate than the one you will actually pay. For uninsured mortgages, the Office of the Superintendent of Financial Institutions sets that qualifying rate at the greater of 5.25% or your contract rate plus 2%. Insured mortgages face a similar test. Budget with the stress-tested payment in mind.
3. Not knowing the down payment rules
You need at least 5% of the first $500,000 and 10% of the portion between $500,000 and $1.5 million. Homes priced at $1.5 million or more need at least 20% down. With less than 20%, you will pay a mortgage insurance premium, which is added to your mortgage.
4. Budgeting only for the down payment
Land transfer tax, legal fees, title insurance, adjustments and, in Ontario, the 8% provincial sales tax on your mortgage insurance premium all have to be paid in cash on closing. Our guide to closing costs for buyers in Ontario walks through a full example.
5. Changing your finances before closing
Your lender can check your job, income and credit again before funding the mortgage. Hold off on a new car loan, new credit cards, large purchases on credit or a job change until after closing, and talk to your mortgage professional first if something can't wait.
6. Choosing on rate alone
The lowest rate isn't always the cheapest mortgage. Ask about prepayment privileges, whether you can port the mortgage to your next home and how penalties are calculated. According to the Financial Consumer Agency of Canada, the penalty for breaking a mortgage is typically the higher of three months' interest or the interest rate differential, and that difference can be large.
7. Not asking about amortization
Since December 15, 2024, first-time buyers and buyers of newly built homes can take a 30-year amortization on an insured mortgage instead of 25 years. The monthly payment is lower, but you pay more interest over the life of the mortgage. Ask your lender to show you both.
8. Leaving the first-time buyer accounts unused
The First Home Savings Account and the RRSP Home Buyers' Plan can add a lot to your down payment, and you can use both for the same home. See where to keep your down payment savings.
9. Auto-renewing without shopping around
When your term ends, compare offers before you sign your lender's renewal letter. OSFI doesn't require federally regulated lenders to apply the stress test when you switch an uninsured mortgage to a new lender at renewal, as long as the amount and amortization don't increase.
We are real estate agents, not mortgage advisors, so confirm the details with your lender or mortgage broker. When you are ready to start looking, call us at (905) 830-9111.
