Getting your mortgage approved is a huge milestone. After all the paperwork, document gathering and number crunching, you finally have the financing in place and can start getting excited about your new home.
But what happens next?
For many homebuyers, especially first-time buyers, the period between mortgage approval and getting the keys can feel a little unclear. There are still several important steps to complete before you officially become a homeowner.
Here’s what happens after mortgage approval in Canada.
1. Your mortgage approval is finalized
First, it’s important to understand that a mortgage approval doesn’t necessarily mean there is nothing left to do.
Your lender may have provided a mortgage commitment or approval with certain conditions. These could include providing updated income documents, confirming your down payment, supplying property information or completing an appraisal.
Once the lender has everything they need and the mortgage is fully approved, your mortgage professional will work with you and the lender to make sure everything is ready for closing.
This is also a good time to review the details of your mortgage, including:
- Your mortgage amount
- Interest rate
- Mortgage term
- Amortization period
- Payment frequency
- Prepayment privileges
- Penalties for breaking the mortgage
- Any other conditions attached to your mortgage
If something doesn’t make sense, ask questions before you sign. Your mortgage is a long-term financial commitment, so you should feel comfortable with what you’ve agreed to.
2. Hire a lawyer or notary
Once your offer is firm, you’ll need a lawyer or notary to handle the legal side of the purchase.
Your lawyer or notary will help transfer ownership of the property into your name, register the mortgage and make sure the necessary funds are transferred to the seller.
They’ll also review and prepare the legal documents you’ll need to sign.
If you haven’t already chosen someone, don’t leave this until the last minute. Your mortgage broker, real estate agent, friends or family may be able to provide recommendations.
3. Your lender prepares the mortgage funds
Behind the scenes, your lender is preparing to advance the mortgage funds to your lawyer or notary.
Your mortgage professional will generally coordinate with the lender and legal team to make sure everything is in place for the closing date.
This is one reason it’s important to avoid making major financial changes after you’ve been approved for your mortgage.
For example, it’s generally wise to avoid:
- Taking out a new loan
- Financing a vehicle
- Applying for multiple new credit accounts
- Changing jobs without discussing it with your mortgage professional
- Making large unexplained deposits or withdrawals
Even though you’re already approved, significant changes to your financial situation can potentially affect your mortgage.
When in doubt, talk to your mortgage professional before making a major financial move before closing.
4. Get your home insurance in place
You’ll also need to arrange home insurance before your purchase closes.
Your lender will typically require proof of insurance before advancing the mortgage funds.
Your insurance provider will give you the documentation your lawyer or notary needs, so don’t wait until the day before closing to arrange it.
If you’re buying a condo or strata property, there are additional considerations because the building itself may have its own insurance policy. Your personal condo or strata insurance still protects your belongings and provides other coverage.
5. Prepare your down payment and closing costs
This is one of the most important things to have ready before closing.
Your down payment is the portion of the purchase price you’re paying yourself, while closing costs are the additional expenses associated with completing the purchase.
Closing costs can include things such as:
- Legal fees and disbursements
- Land transfer or property transfer taxes, where applicable
- Title insurance
- Property tax adjustments
- Utility adjustments
- Other registration and administrative costs
CMHC generally recommends budgeting approximately 1.5% to 4% of the purchase price for closing costs, although the actual amount will depend on your situation and where you’re buying.
And remember: your deposit is usually credited toward your down payment, so you don’t necessarily need to have your entire down payment available again on closing day.
Your lawyer or notary will provide the exact amount you’ll need to bring or transfer before closing.
6. Review the statement of adjustments
One of the documents you’ll encounter before closing is the statement of adjustments.
This accounts for expenses that have already been paid by the seller but that apply, at least in part, to the period after you take ownership.
For example, if the seller has already paid property taxes for the year, you may need to reimburse the seller for the portion covering the period after you take possession.
The same idea can apply to other prepaid expenses depending on the property and the transaction.
Your lawyer or notary will calculate these adjustments for you and include them in the amount you’ll need to provide for closing.
7. Sign your legal documents
A few days before closing — or sometimes closer to the closing date — you’ll meet with your lawyer or notary to sign the necessary documents.
This is where the purchase becomes very real!
You’ll review and sign documents relating to the transfer of ownership and your mortgage. Your lawyer or notary will explain what you’re signing and make sure everything is completed correctly.
If you don’t understand something, ask.
There is no prize for being the person who signs the fastest. Take your time and make sure you understand the documents before putting your signature on them.
8. Closing day arrives
And finally: closing day!
This is the day the sale officially becomes final and you take legal possession of your new home.
Typically, your lender sends the mortgage funds to your lawyer or notary. You provide the remaining money required to complete the purchase, including your down payment and applicable closing costs.
Your lawyer or notary then transfers the purchase funds to the seller and registers the property in your name.
Once everything is complete, you officially own the home.
And then comes the best part…
You get the keys!
9. Pick up the keys and move in
Your possession time will be specified in your purchase agreement.
Once the transaction has closed and your real estate agent or seller has confirmed that the keys are available, you can finally walk into your new home as the owner.
Before you start unpacking, take a few minutes to make sure everything looks as expected. If there are concerns about the property’s condition or something isn’t as agreed upon in the contract, contact your real estate professional right away.
Then it’s time to celebrate — and start figuring out where all those moving boxes are going to go.
A simple mortgage closing checklist
The final few weeks before closing can feel busy, so here’s a quick checklist to keep handy:
Mortgage
- Confirm your mortgage approval and conditions are complete
- Review your mortgage documents
- Ask questions about anything you’re unsure about
- Avoid major financial changes before closing
Legal
- Hire a lawyer or notary
- Provide the requested documents
- Review your legal documents
- Sign the necessary paperwork
Money
- Have your down payment ready
- Budget for closing costs
- Review your statement of adjustments
- Confirm exactly how much money your lawyer or notary requires
Insurance
- Arrange home insurance
- Provide proof of insurance to your lender or lawyer/notary
Moving
- Confirm your possession date and time
- Arrange movers if necessary
- Set up utilities and internet
- Change your address
- Make a plan for your first night in the new home!
The bottom line
Getting your mortgage approved is a major step, but it’s not quite the finish line.
From mortgage approval to closing, there are still legal, financial and administrative details to take care of. The good news is that you don’t have to navigate all of them on your own.
Your mortgage professional, real estate agent and lawyer or notary each have an important role to play in getting you from an accepted offer to homeownership.
If you’re prepared for the costs, paperwork and timeline ahead of you, the process can feel much less overwhelming.
And before you know it, you’ll be standing at your front door with the keys in your hand — officially a homeowner.
Thinking about buying a home? Getting a mortgage pre-approval before you start house hunting can help you understand your budget and prepare for the costs that come with purchasing a home. If you’re not sure where to start, reach out and let’s talk about your options.