- A pre-qualification is an informal estimate based on numbers you told the lender.
- Land transfer tax, legal fees, title insurance, property tax adjustments, and the HST on mortgage insurance premiums are all real costs.
- In competitive Ontario markets, buyers sometimes waive the home inspection condition to make their offer more attractive.
Buying your first home in Ontario is one of the most significant financial decisions you will make — and it happens in a market that moves quickly, with contracts that are long, conditions that expire, and costs that arrive without warning. Most first-time buyers do not know what they do not know. The mistakes on this list are not rare edge cases; they show up regularly, and some of them are expensive.
Here is what to watch for.
1. Confusing Pre-Qualification With Pre-Approval
A pre-qualification is an informal estimate based on numbers you told the lender. A pre-approval means the lender has verified your income, credit, and assets and issued a written commitment. When you make an offer, you need a genuine pre-approval — not a number your bank mentioned verbally. Going into the market with only a pre-qualification risks discovering your real budget only after an accepted offer.
What to do: Get a full pre-approval with verified documents. Ask for the commitment in writing and note the rate-hold expiry date.
2. Underestimating Closing Costs
First-time buyers plan for the down payment and forget that closing day requires additional certified funds — typically 1.5%–4% of the purchase price. Land transfer tax, legal fees, title insurance, property tax adjustments, and the HST on mortgage insurance premiums are all real costs. Arriving at closing short of funds means the transaction fails.
What to do: Ask your lawyer for a detailed closing cost estimate before your offer is accepted. Budget for the full amount — not a hopeful guess.
3. Waiving the Home Inspection to Win a Bidding War
In competitive Ontario markets, buyers sometimes waive the home inspection condition to make their offer more attractive. This saves the seller the inconvenience of an inspection but transfers all unknown defects to you. An uninspected home might have electrical deficiencies, hidden water damage, a failing HVAC system, or a foundation issue that costs tens of thousands to repair.
What to do: If the market pressure to waive is intense, ask whether a pre-listing inspection exists and whether you can bring your own inspector before submitting an offer. Never waive an inspection on an older home without fully understanding the financial risk.
4. Not Having a Lawyer Review the Agreement Before Signing
Many buyers sign the Agreement of Purchase and Sale at an agent's office, then send it to a lawyer afterward — sometimes after all conditions have already expired. By then, the lawyer's ability to protect you is limited. For pre-construction purchases, buyers sign long builder contracts at a sales centre and assume everything is standard.
What to do: For pre-construction, use the 10-day statutory cooling-off period to have a lawyer review the agreement before it becomes binding. For resale, ideally have a lawyer available to review key terms before conditions expire.
5. Ignoring the Deposit Deadline
The deposit deadline in an Ontario Agreement of Purchase and Sale is not flexible. If you fail to deliver the deposit (typically 24 hours after acceptance in certified funds), you are in breach of the contract. The seller can treat the deal as terminated and relist the property.
What to do: Have your deposit funds in a liquid, accessible account before you start making offers. Know what forms of payment are accepted (certified cheque, bank draft, or wire transfer — not personal cheques or e-transfers in many cases) and have them ready.
6. Maxing Out the Mortgage Budget Without a Cash Reserve
Buyers who spend the absolute maximum the bank will lend them, depleting all savings on the down payment and closing costs, have no buffer for what happens next: a broken appliance on day one, a leaking roof in month two, or a job interruption. Home ownership always comes with unexpected costs.
What to do: Buy below your maximum approved amount and keep a cash reserve of at least a few months of mortgage payments and a small maintenance fund. The bank's maximum is not your financial maximum.
7. Skipping the Status Certificate Review for Condos
Buying a resale condo without reviewing the status certificate is a serious risk. The certificate reveals the condo corporation's financial health, outstanding litigation, any special assessments already levied or pending, and the reserve fund balance. An underfunded reserve or a pending major repair can result in surprise assessments — sometimes tens of thousands of dollars — after you close.
What to do: Include a status certificate condition in your offer. Have your lawyer review it thoroughly during the condition period. Red flags in the reserve fund or litigation sections may be deal-breakers.
8. Buying Before Understanding the Full Carrying Costs
The mortgage payment is only one of the ongoing costs of ownership. First-time buyers sometimes focus only on the mortgage and are surprised by property taxes, condo fees (if applicable), home insurance, utilities, and maintenance costs after they move in. Monthly carrying costs can be substantially higher than the mortgage payment alone.
What to do: Build a complete monthly cost picture before making an offer: mortgage payment at the stress-tested rate, property taxes (ask for the current bill), condo fees (check the status certificate or disclosure), insurance estimates, and a maintenance reserve.
9. Changing Jobs or Taking on New Debt Between Approval and Closing
Your mortgage approval is based on your financial snapshot at the time of application. Lenders typically verify employment and financial status again just before closing. If you change jobs, take a parental leave, buy a car, or open new credit accounts in the gap between approval and closing, the lender may reduce or revoke your mortgage commitment.
What to do: Keep your financial life stable from pre-approval through closing. Do not make any major financial changes without first discussing them with your mortgage professional.
10. Not Reading What Is (and Is Not) Included in the Sale
The Agreement of Purchase and Sale specifies what is included in the purchase — fixtures are generally included, chattels are not, unless listed. Disputes about what stays (the light fixture in the dining room, the window blinds, the washer and dryer) are common and sometimes make it to court. First-time buyers often assume everything visible in the house comes with it.
What to do: Specifically list in the APS every item you expect to be included. Walk through the property again before closing to confirm everything included is still there and in working order.
Frequently asked questions
Is it safe to use the seller's agent as my own agent (multiple representation)?
Multiple representation — where one agent represents both buyer and seller — limits the agent's ability to give you confidential advice. It is permitted in Ontario with proper disclosure, but buyers should understand that the agent cannot truly advocate for both sides simultaneously. Independent buyer representation is generally advisable.
What is the biggest mistake that costs the most money?
In our experience, it is the combination of waiving conditions and underestimating closing costs — two mistakes that together can result in a buyer being bound to close a property they cannot afford or cannot properly assess, with not enough cash on closing day.
Should I make a firm offer in a bidding war?
A firm offer (no conditions) is more attractive to a seller, but it carries real risk: you forfeit your deposit and may face further liability if you cannot close. Get legal and financial advice before making a firm offer, particularly as a first-time buyer.
When should I engage a real estate lawyer?
Ideally before your offer is accepted. At minimum, engage a lawyer as soon as you have an accepted offer — do not wait until two weeks before closing.
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