Most first-time buyers get the big decisions right and lose money on the small ones. These five mistakes come up again and again, and every one of them is avoidable.
Most first-time buyers get the big decisions right and then lose money on the small ones. The five below come up again and again, and none of them needs expert knowledge to avoid. It only takes knowing they exist.
1. Assuming you need 20 percent down
You do not. The minimum is five percent on the first $500,000 of the purchase price, rising to ten percent on the portion above that, up to $1.5 million. Our guide to how much down payment you actually need sets out the tiers. Waiting years to reach twenty percent often costs more in rent than it saves in insurance premiums.
2. Treating a pre-approval as a guarantee
A pre-approval tells you what you can probably borrow. It is not a final approval. The lender still has to be satisfied with the property itself, with the appraisal, and with your income on the day it funds. Offers written without a financing condition, on the strength of a pre-approval alone, are where deposits get lost.
3. Changing your finances before closing
Income, employment and credit are all re-checked shortly before funding. A financed vehicle, a new credit card, or a job move between approval and possession can undo an approval that felt settled months earlier. Until the keys are in your hand, change nothing.
4. Shopping the rate and ignoring the terms
The lowest advertised rate often carries the harshest prepayment penalty, the tightest lump-sum privileges, or no portability at all. If there is any chance you will move or refinance mid-term, those clauses will cost you far more than a few basis points ever saved. Fixed or variable is only half the question.
5. Borrowing every dollar you are approved for
An approval is a ceiling, not a target. Work out the payment you would still be comfortable with if rates moved, and test it in a mortgage payment calculator before you start viewing.
None of it is complicated, but it is easier with someone who has seen it go wrong. Deepinder Sidhu takes first-time buyers through all five before an offer is written.
