7 costly first-time buyer mistakes (and how to avoid them)

A plain-language guide for Ontario borrowers · Last updated October 2026

Key takeaways

• Pre-approval is free and tells you your real budget - including the stress test - before you shop.
• Closing costs run to roughly a few per cent of the purchase price, on top of your down payment.
• Freeze your financial life between approval and closing: no new loans, no job surprises.
• Conditions on your offer (financing, inspection) are protections - waiving them is a gamble, not a strategy.
• At renewal, shop the market instead of signing the first offer your lender sends.

Mistake 1: House hunting without a pre-approval

What happens: You browse listings, fall for a place, and write an offer - then discover the bank will lend you less than you assumed, or nothing at all.

Why it hurts: Without a pre-approval, you're guessing at your budget. The federal stress test means you qualify for less than a simple mortgage calculator suggests, so the gap between "what the calculator said" and "what the lender approved" can be tens of thousands of dollars. It also weakens your offer: in a multiple-offer situation, sellers' agents take pre-approved buyers more seriously.

How to avoid it: Get pre-approved before the first showing. It's free, it confirms your real budget under the stress test, and it usually comes with a rate hold that protects you if rates rise while you shop. Read our stress test guide so you understand exactly what the pre-approval number means.

Mistake 2: Borrowing right up to the pre-approved maximum

What happens: You're approved for a certain amount, so you spend it - all of it - on the most expensive home you can find.

Why it hurts: The pre-approved maximum is the most a lender will risk, not the most you should spend. Maxing it out leaves no buffer for rate increases at renewal, surprise repairs (furnaces don't care about your budget), or life changes. A home that strains your budget from day one turns homeownership from a milestone into a grind.

How to avoid it: Treat the pre-approval as a ceiling, not a target. Build your search around a monthly payment you're genuinely comfortable with - including property tax, insurance, and utilities - and leave room to breathe. A slightly smaller mortgage you can actually enjoy living with beats a maximum one you can't.

Mistake 3: Forgetting closing costs

What happens: You save the down payment to the dollar, then get the lawyer's statement of adjustments and discover you need thousands more to actually close.

Why it hurts: Closing costs in Ontario add up fast. Beyond the down payment, you're looking at Ontario land transfer tax (partly offset by the first-time buyer rebate), legal fees, title insurance, and adjustments - things like prepaid property taxes or condo fees the seller has already paid that you have to reimburse. Altogether, it's sensible to budget roughly a few per cent of the purchase price for these on top of your down payment. Buyers who don't budget for them end up scrambling, borrowing, or delaying closing.

How to avoid it: Before you remove conditions on any offer, get a written closing-cost estimate from your broker and your lawyer. First-time buyers should also confirm they're claiming the Ontario land transfer tax rebate - it's money you're entitled to, but it doesn't claim itself. And keep an emergency buffer beyond the closing costs, because houses have a way of needing things in month one.

Mistake 4: Making big financial moves before closing

What happens: Between approval and closing day, you finance a new car, open a store credit card for furniture, or switch jobs - and the lender re-checks your mortgage.

Why it hurts: Your approval was based on a snapshot of your debts, income, and credit. A new car payment raises your debt ratios; a hard credit inquiry can dip your score; a job change can make your income look less stable. Lenders can and do verify employment and pull credit again before funding. In the worst case, the mortgage gets declined days before closing - and you've already removed your financing condition.

How to avoid it: Freeze your financial life from pre-approval to funding day. No new loans, no large credit applications, no quitting your job without talking to your broker first. A job change isn't automatically fatal - a promotion in the same field is usually fine - but your broker needs to know before it happens, not after.

Mistake 5: Waiving conditions to "win" a bidding war

What happens: Competing offers push you to drop the financing condition, the inspection condition, or both - and your offer gets accepted.

Why it hurts: A financing condition is your escape hatch if the mortgage doesn't come through. Waive it and you're legally committed to close whether or not you can get the money - which can mean losing your deposit or facing a lawsuit. Waiving inspection is its own risk: in Barrie's older neighbourhoods and in rural Simcoe County properties with wells and septics, what you can't see can cost you dearly.

How to avoid it: In a competitive market, make your offer strong without making it reckless: a solid pre-approval, a flexible closing date, and a clean offer can win without waiving protections. If you must consider a condition-free offer, talk to your broker and lawyer first about exactly what could go wrong and whether you could survive it. "Winning" a house you can't finance isn't winning.

Mistake 6: Choosing the rate over the terms

What happens: You pick the mortgage with the lowest advertised rate and sign - without reading the fine print on penalties, portability, or prepayment privileges.

Why it hurts: The cheapest rate often comes with the most restrictive contract. Some low-rate mortgages carry punishing prepayment penalties - the kind calculated with an interest-rate differential that can run to several months of payments - or offer no portability if you move, or tiny prepayment allowances if you want to pay extra. Life changes: people sell, refinance, and relocate mid-term far more often than they expect. Over a five-year term, the fine print frequently costs more than the small rate saving was ever worth.

How to avoid it: Compare the whole contract, not the headline number: how the penalty is calculated, whether you can port the mortgage to a new home, prepayment privileges, and what happens at renewal. This is exactly what a broker is for - we lay the trade-offs out in plain language so the "cheapest" option doesn't turn out to be the most expensive.

Mistake 7: Not shopping the renewal later

What happens: Years from now, your lender mails a renewal offer, and you sign it because it's easy.

Why it hurts: Renewal offers are starting positions, not final ones. Lenders count on inertia - most borrowers don't shop around, so the first offer rarely reflects the best available terms. Over a 25-year mortgage, renewing unexamined several times can cost far more than any single buying mistake on this list.

How to avoid it: Start shopping about four months before your term ends. A broker can compare your lender's offer against the market and negotiate - often at no cost to you, since the new lender pays the broker. Our renewal vs. refinance guide walks through exactly how to think about it.

The seven mistakes at a glance

Mistake	What it costs you	The fix
Shopping without pre-approval	Falling for homes you can't finance; weak offers	Get pre-approved before the first showing
Borrowing the maximum	No buffer for rate rises or repairs	Buy to a comfortable payment, not the ceiling
Forgetting closing costs	Thousands owed at closing you didn't budget	Get a written estimate; budget a few per cent extra
Big moves before closing	Approval pulled days before funding	Freeze new credit and job changes until after closing
Waiving conditions	Deposit at risk; hidden defects become yours	Keep financing and inspection conditions
Rate over terms	Brutal penalties; no flexibility if life changes	Compare penalty, portability, and prepayments too
Ignoring renewal shopping	Overpaying for years on autopilot	Shop the market four months before each renewal

A Barrie note on where these mistakes bite hardest

These mistakes are universal, but a few have a local flavour. Buyers stretching into Barrie's market from the GTA sometimes waive conditions out of habit from hotter bidding wars - then hit a financing snag their Toronto experience didn't prepare them for. And rural Simcoe County properties - acreages around Oro-Medonte, homes on well and septic near Angus or Alliston - make the inspection condition especially important, because lender and insurer requirements for wells, septics, and outbuildings can surprise first-time buyers.

The through-line is the same everywhere: slow down, get the facts, and get advice from someone who does this every day in your market. That's the job.