It takes time and effort to get everything in order to purchase a property (see my step-by-step guide here).
Starting with getting your documents to your lender for approval, answering their questions, waiting on credit checks (and sometimes finding a “surprise” that needs to be addressed), followed by the time-consuming process of shopping for the right home (see my tips on how to save time and money when shopping for a new home here), buyers like you and REALTORs® like me put a lot of time and effort into this endeavour.
With all of this valuable time and effort invested, the last thing you want to have happen is for your lender to retract their commitment to you when you’re out home shopping, or worse still, after you have a legally binding Contract of Purchase and Sale in place on your dream home!
Many people are unaware that a lender can revoke their commitment to you.
If you have a legally binding Contract of Purchase and Sale, you are in a legal commitment with the other party, and without the backing of your bank, you may be forced into a much more costly private lender situation with interest rates much higher than those previously promised to you in order to complete your side of the obligation.
I want all of my clients to avoid these most common and costly mistakes, so please, if you are even thinking of buying a home, I must insist that you do not do any of the items below until AFTER your mortgage has funded and you have moved into your new home.
See my list below of what NOT to do:
- Do not do anything that will alter your credit score, including applying for a new credit card, paying a bill late (even if you are disputing a charge, as this still shows as a non-payment. Discuss with the credit card company to get a written assurance that they are crediting your account for the amount in dispute, and be sure to check that the amount does not go back on your card at a later date)
- Do not buy a new car, take out a car loan or lease. This affects your ability to pay your mortgage in the eyes of the lender and will likely result in you being qualified for less funds.
- Do not enter into a “buy now, pay later” contract for anything, as this will be added to your credit file and impacts you negatively in the eyes of the lender.
- Do not make “big moves” in your bank accounts. Banks and lenders typically want to see a 3-month history of stable spending and funds. If large amounts of money has been moved around, you will be required to give good reasons for this, and this can cause at best, delays, and at worst, the lender refusing to fund your purchase
- Don’t change your career or move to a new job, even if it pays more as you will still be on “probation” and this is a red flag for lenders as they want to see stability and minimize risk. Either change the start date of the new job, or talk to your REALTOR® about changing the date of completion (and therefore mortgage funding) on your Contract of Purchase and Sale to ensure that you are funded before you make the career or position change.