After more than 20 years working in real estate and mortgages, we’ve seen the same mistakes show up over and over again. Some of them cost people money. Some of them cost people their approval. A few of them have cost people their dream home entirely.
None of them had to happen.
This post is a straightforward rundown of the most common mortgage mistakes we see, along with what to do instead. Save it, share it, come back to it before you make any big financial moves during a purchase or renewal.
Mistake #1: Treating the Rate as the Only Thing That Matters
This one tops the list because it’s the most widespread and the most expensive.
The lowest interest rate does not necessarily mean the lowest cost mortgage. A mortgage is a product with features, restrictions, and penalty structures that vary significantly from lender to lender. The rate is one line item in a much larger equation, and fixating on it while ignoring everything else is like buying a car based solely on the sticker price without asking about fuel economy, maintenance costs, or whether it has brakes.
Here’s what actually matters beyond the rate: the penalty to break your mortgage early, the prepayment privileges that let you pay down faster, portability provisions that allow you to take your mortgage to a new property, and your ability to access equity if your circumstances change.
The majority of Canadian homeowners will break their mortgage before the term ends. A sale, a refinance, a separation, a job change – life happens. If you signed up for the lowest rate and the most restrictive product, the penalty when life happens could easily run to $10,000, $15,000, or more. Saving $20 per month on your payment in exchange for a $15,000 penalty is not a win.
Mortgages are a product. Know what you’re buying.
Mistake #2: Buying a Car (or Making Any Major Purchase) Before Closing
We tell every client this at the start of our process. And we still see it happen.
Between your mortgage approval and your possession date, your financial picture needs to stay as close to identical as possible. Lenders do a final review of your application before funds are released. A new car loan, a financed appliance package, a large credit card charge – any of these can change your debt ratios, lower what you qualify for, and in some cases put your approval at risk entirely.
The home closes first. The car, the furniture, the renovation materials – all of it should wait until after possession unless we speak about it first.
Mistake #3: Quitting Your Job Before the Mortgage Funds
Employment stability is one of the primary things lenders look at. Your approval is based on the income and employment situation you presented at application. If that changes before closing – a new job, a switch from salaried to contract work, a resignation – the lender has grounds to revisit or decline the file.
If a career change is on the horizon, the conversation to have is with us, before anything is signed. Timing matters, and making that move in the wrong order can cost you far more than the new opportunity is worth in the short term.
Mistake #4: Moving Money Around Without a Paper Trail
Down payment documentation requirements are specific, and unexplained movement of money is one of the most common sources of delays and declined applications.
Lenders need a 90-day history of all funds used for your down payment and closing costs. Any deposit over ~$2,500 in that window needs to be explained. If the money came from another account, a 90-day history of that account is also required.
Cash deposits, e-transfers without clear context, funds moved from cryptocurrency wallets, and transfers from business accounts without explanation all create compliance issues. The source of every dollar in your down payment needs to be traceable and documented.
If your funds are coming from investments, international accounts, an RRSP, an FHSA, or a family gift, start the paperwork well in advance. RRSP withdrawals under the Home Buyers’ Plan have their own timelines and documentation requirements. None of these are problems with the right preparation!
Mistake #5: Not Disclosing Everything
We are never judging you. We are trying to protect you and get you approved. The more we know, the better we can build your file.
Things that need to be on the table: every property you own, every debt you carry, every co-signing arrangement you’ve entered into, any child or spousal support you pay or receive, any business interests, any recent job changes, any side income. If you think it might be relevant, it is.
Lenders will find what you don’t disclose. A lender’s search is thorough and it crosses multiple data sources. If something surfaces that wasn’t in the application, the best case scenario is a delay while we explain it. The worst case is a declined approval and a wasted application.
Tell us everything. We’ll filter it down to exactly what the lender needs to see and frame it in the way that gives your application the strongest possible position.
Mistake #6: Signing the Renewal Letter Without Reviewing Your Options
This one is for the homeowners reading this, not first-time buyers.
Every year, an enormous number of Canadian homeowners receive a renewal letter from their lender, glance at the rate, and sign it without a second thought. Their lender is counting on exactly that. That renewal offer is not the best deal available to you. It’s the deal your lender is comfortable giving you when they’re confident you won’t push back.
A quick review of your options at renewal costs you nothing. Staying with your current lender simply because it’s easier could cost you thousands over the term. The majority of the time, switching lenders at renewal has no penalty. You owe it to yourself to at least know what else is available before you sign.
Mistake #7: Not Getting Pre-Approved Before You Start Shopping
A pre-approval is not a formality. It’s the foundation of a successful purchase.
Without a pre-approval, you’re shopping without a budget, and any offer you make is contingent on financing that hasn’t been verified. In a competitive market, that’s a meaningful disadvantage. More importantly, a pre-approval surfaces any credit issues, income documentation gaps, or qualification concerns before you’re emotionally invested in a specific property. That’s the right time to find out, not after your offer has been accepted.
Pre-approvals also lock in a rate for a set period, which protects you if rates move upward while you’re searching. Get the pre-approval done first. Then go shopping for your dream home!
Mistake #8: Ignoring the Penalty Structure
Before you sign any mortgage, you need to understand what it costs to break it. Not whether you plan to break it – most people don’t plan to, and most people do anyway. What it actually costs.
Banks and lenders calculate penalties in very different ways. For fixed rate mortgages, the interest rate differential method can produce penalties that are shockingly large relative to what borrowers expect. Some mortgage products can only be broken when the property is sold – there is no refinancing, no equity access, no early exit for any other reason.
Knowing your penalty structure is not pessimism. It’s the information you need to make a fully informed decision about the product you’re committing to.
Mistake #9: Incorporating Without Talking to a Mortgage Broker First
This one is specific to business owners, and it catches people off guard more than almost anything else.
If you are considering incorporating your business and you have any real estate plans in the next two to three years – a purchase, a refinance, a renewal – please have that conversation with us before you incorporate.
Some lenders require two years of corporate tax returns before they’ll lend to an incorporated borrower. Others have requirements around retained earnings and how income is drawn. Incorporating in January and discovering in November that it’s closed off your mortgage options for the foreseeable future is a painful and entirely avoidable situation.
Mistake #10: Maximizing Your Down Payment at the Expense of Everything Else
More down payment is not automatically better, and putting every dollar you have into the purchase is a strategy worth questioning.
Taking possession of a home with no financial buffer leaves you exposed. Homes have needs. The first months of ownership often come with unexpected costs. Having no emergency fund because it all went into the down payment is a precarious position.
There’s also an investment case to consider. Real estate allows extraordinary leverage – with 5% down, you can control a significant asset and let it appreciate on the full value while your own capital exposure is a fraction of it. Whether maximizing the down payment or preserving capital for other opportunities is the right call depends on your full financial picture, and it’s a calculation worth doing properly rather than defaulting to the biggest number possible.
The Mistake Underneath All the Mistakes
Most of the mistakes on this list share a common root: not starting the conversation early enough and not having a strategy in place before the decisions needed to be made.
The buyers and homeowners who navigate the mortgage process well are not the ones with the simplest situations. They’re the ones who have a mortgage broker in their corner early, who ask questions before they sign anything, and who treat their mortgage as a financial tool that needs to fit their life – not a transaction to get through as quickly as possible.
Book a Discovery Call before your next purchase, renewal, or refinance. That conversation is free, it takes less than an hour, and it’s the single most effective way to avoid everything on this list.
Cheryl Sanguinetti is a Calgary-based Mortgage Broker and the founder of Cheryl Sanguinetti Mortgages. She specializes in helping homeowners, investors, and self-employed Canadians build mortgage strategies that support long-term financial goals.