The national average home price in Canada was $691,643, with Toronto prices soaring past $1,165,691, as of June 2025. This means the financial stakes for homebuyers have never been higher, making a smooth mortgage closing more critical than ever.
Closing on a mortgage is supposed to be the thrilling finale of your home-buying journey — but it’s not always an easy process and there are many pitfalls that can trip you up along the way. Let’s take a look at these challenges, with the help of Meridian Mortgage expert, Mike Healy.
1. First, is your mortgage fully approved?
One of the most common mistakes during mortgage closing — especially among first-time homebuyers — is confusing mortgage pre-approval with final loan approval. Pre-approval is based on preliminary financial information and is just the first step in the process. It doesn’t mean your loan is officially approved.
“Industry experts say that perhaps only 75% of pre-approved buyers in Canada receive final approval on their mortgage closing,” explains Mike Healy. “So, you should think of pre-approval as a starting line — not the green light. Your mortgage still needs to go through underwriting, where your income, assets, and credit will be closely reviewed.”
Mike Healy, MBA, Regional Manager, Mobile Mortgage Sales
2. Home inspection details that are left hanging
While the home inspection is typically an early part of the purchasing process, issues discovered during the inspection can become a closing hazard if not handled properly. Major repairs such as foundation issues, a leaky roof, or faulty electrical systems could lead to a breakdown in negotiations if you and the seller can't agree in advance on who will cover the repair costs.
This issue is cropping up more frequently these days, especially during bidding wars in hot markets such as Toronto and Vancouver, where 30% to 40% of home purchases are made without an inspection contingency.
“It is crucial to address any inspection-related concerns with your real estate agent and the seller well before closing day,” Healy says, “especially since statistics show that about 85% of Canadian home inspections reveal at least one issue.”
3.Higher than expected closing costs
Many first-time homebuyers focus only on the down payment and monthly mortgage payments, overlooking the additional costs that will be counted on closing day. These can include legal fees, property tax adjustments, and land transfer tax (especially in places like Toronto, which have both a provincial and a municipal tax).
These are upfront cash expenses that may total 3% to 4% of the home's purchase price and must be factored in to help keep your debt-to-income ratio (DTI) at the right level. Most lenders prefer a DTI below 36% or thereabouts for favorable terms.
4. Homeowner’s insurance is a must
Your lender will require that you have a homeowner's insurance policy in place before closing. That’s because they (and you!) need to protect their investment against potential damage from fire, natural disasters, or other unfortunate events.
“Waiting until the last minute to find an insurance provider can be a closing hazard, as some properties or locations may be difficult or expensive to insure,” warns Healy.
5. Negative changes to your credit score
“If your credit score drops between the time you're pre-approved and when you make an offer on a home, your mortgage application could be denied,” Healy cautions.
Beyond opening new lines of credit, any negative activity on your credit report can be a major problem at mortgage closing. Late payments on existing bills, accumulated new debt, or maxed out credit cards can all negatively impact your credit score and represent a red flag in the eyes of your lender.
To qualify for a mortgage in Canada, a credit score of 680+ is generally required for conventional loans, while 620+ may suffice for insured mortgages. More than 95% of new mortgage holders in Canada have a credit score above 660, according to CMHC data . This indicates tight lending standards and the importance of a strong credit history.
So, be sure to closely monitor your credit history and scores right up until the moment your mortgage closes.
6. Large transactions and money transfers
One of the most common — and easily avoidable — pitfalls during mortgage closing is making big purchases or moving large amounts of money before your loan is fully approved.
Large unexplained deposits or withdrawals in your bank accounts can raise red flags among lenders during underwriting. For instance, in Canada, financial gifts help many first-time homebuyers with their down payments. These gifts averaged $74,570 in 2024, according to a CMHC survey. Lenders will keep a close eye for verifying the source of this financial assistance.
7. Paperwork snags and delays
The closing process involves a mountain of paperwork, everything from the mortgage application to the final settlement statement. Simple errors such as a misspelled name or an incorrect figure on a document can cause frustrating delays on closing day. For instance, some lenders may reject an insurance certificate if it lists only the applicant’s first and last name and omits the middle name.
Because such a large percentage of mortgage fraud cases involve falsified documents, it’s no surprise that lenders are now more stringent than ever.
“To prevent delays, ensure that your lender has enough time between your mortgage application and closing date to gather, review, and finalize all necessary documents,” suggests Healy.
8. Scheduling conflicts among the concerned parties
Mortgage closing involves careful coordination among several parties, including lawyers, lenders, and brokers. Something as simple as a missed signature or a delayed wire transfer can push back your move-in date.
Do your best to stay flexible with your schedule and remain attentive so you can promptly handle any last-minute requests.
“It’s smart to start the process as early as possible — especially if your closing date is 120 days away,” suggests Healy. “Lenders like Meridian offer rate guarantees, allowing you to secure the lowest available rate between your application and closing, for up to 120 days.”
9. Broken promises from your mortgage broker
Some mortgage brokers may promise easy approval early in the process, only to reveal qualification issues right before closing. This could leave you scrambling to find an alternative private lender — often with significantly higher interest rates.
“It’s important to choose a reputable lender or broker, and don’t rely solely on verbal promises,” says Healy. “Ask for written documentation at every stage.”
10. Close your mortgage with greater confidence
At Meridian, you’re right at home when it comes to the mortgage home closing process. For more details, speak to a mortgage expert today.
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