When to Have Your Money Ready? A Timeline for Home Buyers

Tim Lyon • June 6, 2024

Understanding when and how to pay for your home


You’ve decided how much you’ll use for your down payment and set aside money for closing costs—but when do you actually need to have the funds ready? How do you make such a large payment? And who do you give it to?

Here’s a simple timeline of when each payment is due, how it’s made, and who handles it.


The Two Key Payments You'll Make

When buying a home, your down payment isn't paid all at once. It's split into two separate payments at different times:

  1. The Deposit
  2. The Remaining Down Payment (plus closing costs)


Let's walk through each one.


1. The Deposit

What Is It?

The deposit is typically around 5% of the purchase price, though this amount is negotiable with the seller. Think of it as a good-faith payment showing you're serious about the purchase.


When Is It Due?

The timing depends on what's written in your purchase agreement. Common clauses include:

  • At subject removal
  • Within 24 hours of subject removal
  • Within 48 hours of subject removal

In most cases, you'll need the deposit ready within a week or two of getting an accepted offer.


How Do You Pay It?
You’ll pay your deposit with a bank draft made out to your realtor’s trust account. Your realtor will provide the exact details.


The realtor’s brokerage will hold your deposit in trust until closing day, when it’s sent to your lawyer or notary. The deposit forms part of your total down payment—it’s not an extra cost.


2. The Remaining Down Payment and Closing Costs

What Is It?

This is the rest of your down payment, along with most of your closing costs, including:

  • Property transfer tax
  • Legal fees
  • Title insurance
  • Adjustments (property taxes, strata fees, etc.)


When Is It Due?

You'll pay this amount when you visit your lawyer or notary to sign the final mortgage documents and title transfer paperwork. This appointment typically happens 3 to 5 days before closing, though it can vary depending on the situation.

Your lawyer or notary will tell you the exact amount you need to bring to this appointment.


How Do You Pay It?

Again, you'll pay with a bank draft made out to your lawyer or notary's trust account.


What Happens with All These Funds?

Your lawyer or notary acts as the central hub for all the money involved in your transaction. Here's how it flows:


They receive:
  • Your initial deposit (from the realtor's trust account)
  • Your remaining down payment and closing costs (from you)
  • The mortgage funds (from your lender)


They distribute:
  • The full down payment plus mortgage funds to the seller
  • Property transfer tax to the government
  • Title insurance premium to the insurer
  • Any adjustments to the seller
  • Their legal fees


Everything gets sorted in one coordinated process on closing day.


Other Payments to Plan For

Appraisal (if required): Paid directly to the appraiser before the appraisal is completed. I'll help you coordinate this.

Home Inspection: Paid directly to the inspector. Your realtor will help you coordinate this.


Key Points to Keep in Mind

  • If your down payment or deposit funds are in an investment or registered account, plan ahead—redemptions take time depending on your financial institution.
  • You’ll need to have your deposit funds ready within a week or two of getting an accepted offer.
  • Your down payment and closing costs must be available 3–5 days before closing.
  • If you bank with an online-only bank (Tangerine, Wealthsimple, EQ, etc.), allow at least a week to obtain a bank draft.


Frequently Asked Questions

Q: If my funds are spread across multiple accounts or shared with another borrower, can we use more than one bank draft?
A: Usually yes, as long as they total the required amount. Confirm with your realtor (for the deposit) or your lawyer/notary (for the down payment).


Q: My down payment is invested—when should I sell my investments?
A: As long as the funds are in your chequing account 3–5 days before closing, you’re fine. But to avoid market swings and stress, it’s best to liquidate once you’ve removed subjects. You might miss a small gain, but you’ll have certainty that your down payment is secure.


Q: How do I get a bank draft?
A: Go to your local bank branch and ask for one. You’ll need to specify the recipient name (for example, your realtor’s or lawyer’s trust account) and the amount.


Q: How long does it take to get a bank draft?
A: If your bank has local branches, it should take 10–15 minutes. With online-only banks, plan for a week or more.


Q: How do I withdraw funds from my RRSP or FHSA for my down payment?
A:
If your down payment is coming from a registered account, it’s important to understand the process:

  • For RRSP withdrawals, you’ll use the Home Buyers’ Plan (HBP). Learn more here: How to withdraw from RRSP.
  • For FHSA withdrawals, the funds can be taken out tax-free when used for a qualifying home purchase. Learn more here: How to withdraw from FHSA.

Both withdrawals take time to process, so plan early to ensure funds are available before closing.


Quick Summary

  • Deposit: ~5% of the purchase price, due at subject removal, payable by bank draft to your realtor’s trust account.
  • Down payment + closing costs: Due 3–5 days before closing, paid by bank draft to your lawyer or notary.
  • Allow extra time if your funds are in investments or an online-only bank.
  • Appraisal and inspection are paid directly before those services take place.


Next Steps

The key to a smooth closing is knowing these timelines and planning accordingly. If you're unsure about any part of the process, or if your down payment situation is more complex, I'm here to walk you through it.

Book a consultation or call 778-988-8409.


Glossary

Bank Draft:
A certified payment issued by your bank, guaranteeing funds to the recipient.

Closing Costs:
Expenses due at closing, including legal fees, taxes, title insurance, and adjustments.

Deposit:
Funds paid at subject removal to secure your offer, held in trust until closing and applied toward your down payment.

Down Payment:
The amount you contribute toward the purchase price of your home.

Subject Removal:
The point in your offer process when you confirm financing and inspections are complete, making your purchase binding.

Tim Lyon

Mortgage Consultant

Mortgage Renewal vs. Refinance: Understanding the Key Differences

By Tim Lyon • November 25, 2025
If you own a property with a mortgage, you've probably heard the terms "renewal" and "refinance" thrown around. While both involve obtaining a new term for your mortgage, there are some important differences to understand. Let's break down what each one means and when you might use them. Understanding Mortgage Basics In Canada, when you take out a mortgage, the payments are typically spread over 25 to 30 years. This period is known as the amortization. However, unlike in the U.S., Canadians do not keep the same interest rate and payment terms for the entire amortization period. Instead, you have an initial term, usually 3 to 5 years, after which you need to renew into a new term. For example, if you have a 25-year mortgage with 5-year terms, you will need to renew your mortgage four times throughout its lifespan. It's also common to have a mix of different term lengths over the course of your mortgage. What is a Mortgage Renewal? A mortgage renewal occurs at the end of your mortgage term. When you renew, you start a new term with a new interest rate while keeping the remaining details of your mortgage the same. The key element here is that the mortgage charge registered on your property's title remains unchanged. A renewal is straightforward and typically does not involve any significant changes to your mortgage agreement other than a new interest rate. Think of it as hitting the "continue" button on your mortgage, but at new rates. What is a Mortgage Refinance? A mortgage refinance is different. When you refinance, you are making changes to your original mortgage agreement. This means paying off your existing mortgage and registering a new one on your property's title. Essentially, you are taking out a completely new mortgage for the same property. People commonly refinance to: Access the equity in their home for investments or major purchases Consolidate high-interest debt into their lower-rate mortgage Extend the amortization period to reduce monthly payments and improve cash flow Make significant changes to their mortgage structure It's important to note that refinancing is not allowed for insured properties (those with less than a 20% down payment at purchase). This means the maximum loan amount in a refinance is 80% of your property value. What About Switching Lenders? If you want to keep everything the same but switch lenders for a better rate, this is known as a transfer. A transfer is a type of renewal where the original mortgage charge is transferred from one lender to another. Depending on the lenders involved, you might be able to make minor changes (like extending the amortization or changing borrowers) without needing a full refinance. Why Timing Matters Your mortgage maturity date is when your current term ends. This is the ideal time to either renew or refinance. If you refinance or switch lenders before the maturity date, you will face a prepayment penalty. If you refinance, renew or transfer at maturity, there is no penalty. Real-World Example A homeowner with a $450,000 mortgage is reaching the end of their 5-year term. Their lender offers a renewal rate, but they also have $40,000 in high-interest credit card debt. Option 1: Renewal They accept the new term. Their mortgage stays the same. Their debt remains separate at high interest rates. Option 2: Refinance at Maturity They consolidate the credit card debt into the new mortgage. Their total monthly payments drop significantly, even after accounting for the new mortgage balance. In this situation, refinancing provides better cash flow and a simpler payment structure. Quick Summary Mortgage Renewal: Starts a new term for your existing mortgage Mortgage charge on your title stays the same Keeps all other terms the same aside from interest rate Can switch lenders at renewal through a transfer No penalty when done at maturity Mortgage Refinance: Pays off current mortgage and creates a new one New mortgage charge registered on your title Often resets the amortization period Can access equity or make structural changes Maximum 80% of property value for uninsured mortgages Incurs penalty if done before maturity Next Steps Understanding the difference between renewal and refinance helps you make informed decisions about managing your mortgage. If you have a renewal coming up or are considering accessing your home equity, now is a good time to explore your options. Whether you're looking to renew, refinance, or switch lenders, I'm here to help you navigate the process and find the best solution for your situation. Need help with your mortgage? Book a consultation or call 778-988-8409 . Glossary Amortization: The total time period over which you'll pay off your mortgage, typically 25-30 years in Canada. Insured Mortgage: A mortgage where the down payment was less than 20%, requiring mortgage default insurance to be added. Maturity Date: The end date of your current mortgage term, when you need to renew or refinance. Mortgage Charge: The legal registration of your mortgage on your property's title. Pre-payment Penalty: A fee charged by your lender if you pay off your mortgage before the end of your term. Refinance: Replacing your existing mortgage with a new mortgage, often with different terms or to access equity. Renewal: Starting a new term for your existing mortgage, typically just updating the interest rate. Term: The length of time your current mortgage contract is in effect, typically 3-5 years in Canada. Transfer: Moving your mortgage from one lender to another at renewal without changing other terms.

What Is an Insured Mortgage and How Does It Work?

By Tim Lyon • October 28, 2025
If you're buying a home with less than 20% down, you'll need something called an insured mortgage. Many borrowers find this confusing at first, especially since it doesn’t refer to insurance for you, the borrower. That’s why I have put together this straightforward breakdown so you understand what insured mortgages are, why they exist, and how they affect your purchase. What Is an Insured Mortgage? A mortgage must be insured when a borrower makes a down payment of less than 20% on a home purchase. The insurance protects the lender (not the borrower) in case the borrower defaults. The insurance is guaranteed by the federal government. So, why do we have this program? It allows borrowers to buy homes with smaller down payments and higher loan-to-value (LTV) ratios. Higher loan-to-value mortgages are inherently more risky because there is not much cushion if the housing market starts to decline. For example, if someone buys a $500,000 home with only 5% down ($25,000), they’ll need a $475,000 mortgage—this is a 95% LTV . If the market drops and the home’s value falls to $470,000, the mortgage would still be $475,000. If the borrower stopped making payments, the lender could lose money after selling the home and paying costs. That kind of loss, multiplied across thousands of borrowers, could threaten the stability of the entire banking system (as we saw in the U.S. in 2008). The mortgage insurance system is designed to prevent that scenario by spreading risk and keeping lenders protected. How Does the Insurance Work? You, the borrower, pay the insurance premium. It's typically added directly to your mortgage balance rather than paid upfront. The cost depends on your down payment size and amortization. Example: Purchase price: $500,000 Down payment: $25,000 (5%) Mortgage amount: $475,000 Insurance premium: 4.2% = $19,950 Total new mortgage: $494,950 The insurance does add cost, but insured mortgages usually offer slightly lower interest rates because the lender's risk is minimal. The rate savings don't fully offset the premium, but they help. The Insurer’s Role For insured mortgages, the insurer’s approval is the most important part of the process. If the insurer won’t approve the file, no lender can. Once the insurer signs off, we can typically find a lender to fund the loan. Canada has three mortgage insurers: CMHC (public) Sagen (private) Canada Guaranty (private) All of the insurers are backed by government guarantees and have to follow similar rules, but each has a few unique programs. Lenders usually choose the insurer, though I sometimes work with them to send a file to a specific insurer if it benefits the borrower. Qualification Rules Because insured mortgages are government-backed, the rules are strict: Debt ratios: 39% of your income can go toward your stress-tested mortgage payment, property taxes, heat, and half of condo fees 44% of your income can go toward the above plus your other debts Down payment: 5% on the first $500,000, 10% on the remainder Maximum purchase price: $1.5 million Amortization: Maximum of 25 years for most buyers; up to 30 years for first-time buyers who qualify under the new federal program Unlike with an uninsured mortgage, where lenders may have some flexibility if your income ratios are slightly above the limits, there is no discretion on an insured mortgage. If your ratios exceed the limits even a little bit, the insurer will decline the application. The Approval Process The process is similar to an uninsured mortgage, with one extra step: We submit your mortgage application to the lender of choice They do their initial review If that looks good, they package it up and send it to the insurer Once the insurer has reviewed and approved it, the file comes back to the lender for final review and approval Common Misunderstandings About Insured Mortgages Many borrowers are surprised to learn the following facts about insured mortgages: You do not need to be a first-time homebuyer to buy with less than 20% down You cannot buy an investment property with less than 20% down You can buy a second home with less than 20% down You cannot refinance an insured mortgage and keep the insurance. If you have an insured mortgage and do refinance, you will lose the insurance. This mostly affects the lender, but it also moves you to uninsured rates. Why Choose an Insured Mortgage? Given the cost and restrictions, why would anyone choose an insured mortgage? The main reason is accessibility . It allows you to buy a home without saving a full 20% down payment, which is increasingly difficult with high home prices and living costs. It can also be a strategic choice. Some buyers prefer to keep more of their savings invested or diversified instead of tying everything up in a down payment. If your investments are earning more than your mortgage costs, keeping that money invested might make financial sense. Real-World Example Let's say you're buying a $600,000 home. Here's how the costs compare between the minimum down payment for an insured mortgage and the minimum down payment for an uninsured mortgage: