Applying for a mortgage is one of the biggest financial steps you’ll ever take—so it’s important to get it right from the start. From overlooked paperwork to poor credit prep, home loan applications are filled with traps that can delay or derail your homeownership goals. The good news? With a little strategy and awareness, you can steer clear of the most common mistakes and make smarter decisions along the way.
In this guide, we’ll cover the biggest pitfalls first-time and seasoned buyers should avoid—and show you actionable tips to help you pay off your mortgage faster.
10 Common Mortgage Mistakes to Watch Out For
1. Not Checking Your Credit Score First
Your credit score plays a major role in mortgage approval and the interest rate you’ll be offered. A higher score could save you thousands over the life of your loan.
What to do: Check your credit report at least three months before applying. Dispute any errors and work on paying down existing debts to boost your score.
2. Skipping Pre-Approval
House hunting before getting pre-approved is like shopping without a price tag. Without knowing how much you can borrow, you risk wasting time—or falling in love with a home that’s out of reach.
What to do: Get pre-approved before you start browsing. It shows sellers you’re serious and gives you a solid budget range.
3. Overestimating Your Budget
Just because a lender approves you for a certain amount doesn’t mean you should borrow all of it. Many buyers make the mistake of maxing out their budget and leaving little room for other life expenses.
What to do: Calculate your ideal monthly repayment, considering all expenses—property taxes, insurance, utilities, and maintenance.
4. Making Major Financial Moves Before Settlement
Taking on new debt, switching jobs, or making large bank deposits before settlement can complicate or even cancel your mortgage approval.
What to do: Keep your financial profile stable during the loan process. If changes are unavoidable, speak to your lender first.
5. Skimming the Fine Print
Loan agreements are packed with important details—from interest type and term to redraw restrictions and break costs. Skipping over them can cost you.
What to do: Read your loan documents carefully. Ask your broker or lender to clarify anything you’re unsure about before signing.
6. Not Comparing Lenders
One of the biggest mistakes is going with the first lender you find. Rates, fees, and loan features vary greatly from one provider to the next.
What to do: Shop around. Use online comparison tools and speak to multiple lenders or brokers to find the best value.
7. Forgetting About Closing Costs
Many buyers focus so heavily on the deposit that they forget about closing costs—which can range from 2% to 5% of the home’s purchase price.
What to do: Set aside funds for stamp duty, legal fees, title insurance, and other settlement costs to avoid last-minute stress.
8. Skipping the Home Inspection
Opting out of a home inspection to save a few hundred dollars can backfire if the property hides major issues.
What to do: Always get a professional building and pest inspection to uncover any costly surprises before finalising the deal.
9. Making Large Deposits Without Documentation
Unexplained large deposits can raise lender concerns about whether the funds are borrowed, potentially slowing down the approval process.
What to do: Keep a paper trail for all deposits—especially your deposit funds. Gifts or transfers should be clearly documented.
10. Not Getting Pre-Approved (Yes, Again!)
It’s so important we’ll say it twice. Without pre-approval, your home search lacks financial direction and credibility with sellers.
Bonus: 8 Ways to Pay Off Your Mortgage Early
Once you’ve secured a home loan, the next goal for many borrowers is to become mortgage-free. Here are some smart strategies to help you pay it off faster:
1. Make Extra Repayments
Even small additional payments—monthly or annual lump sums—can dramatically reduce your loan term and interest paid.
2. Refinance to a Shorter Loan Term
Switching to a 15-year mortgage increases your monthly payments, but it significantly cuts down the total interest paid.
3. Round Up Your Payments
Round your repayments to the nearest $100 or $500. The extra amount goes straight toward the principal, helping you pay off the loan sooner.
4. Make Bi-Weekly Payments
This strategy gives you one full extra payment per year, accelerating the payoff timeline and cutting down interest.
5. Cut Expenses and Boost Income
Reallocating funds from your budget—like reducing subscription services or taking on a side gig—can give you more cash to direct toward your loan.
6. Use Windfalls Wisely
Apply tax returns, bonuses, or other lump sums straight to your loan. It’s a simple way to chip away at the balance without altering your lifestyle.
7. Specify Principal-Only Payments
When making extra repayments, be sure they’re going toward the principal. Contact your lender to ensure they’re allocated correctly.
8. Automate Your Extra Payments
Set up recurring transfers to automatically make extra repayments. Automation ensures consistency and keeps you on track with your goals.
Final Thought
Applying for a mortgage doesn’t have to be stressful—and paying it off early doesn’t have to be a dream. By avoiding common mistakes during the application process and taking small but consistent steps to pay down your loan faster, you can enjoy financial freedom and long-term security. Partner with a knowledgeable broker, stay proactive, and focus on your big-picture goals.