When the mortgage money doesn’t show up on time

What do you do when your mortgage funds don’t show up on time? Getting mortgage funds is a surprisingly complicated process. Failure at any point in that convoluted process can cause a wide range of problems.

The Mortgage Funding Process

Here is the general process for getting a mortgage approved and funded. This process can get infinitely more complicated for second and third tier lenders, or where multiple brokers are involved.

• the buyer decides whether they want to use an independent mortgage broker or a banker to help them through the approval process
• the mortgage broker or banker takes the client through the approval process, getting information on identification, income, assets and debts
• the mortgage broker, banker and client decide which lender and product they want to use
• the lender approves the client for a loan
• the loan is “instructed” to the lender – the broker or banker sends all of the information to the lender
• the lender opens a file, reviews the information sent to them, and decides whether they want more information
• the banker or mortgage broker works with the lender to iron out any outstanding conditions for funding
• the lender “instructs” the BC Notary or conveyancing lawyer who will be working on the file
• a large package of instructions, conditions and documents is sent to the BC Notary or conveyancing lawyer
• the BC Notary or conveyancing lawyer starts up their file, gathers initial information and does an “intake” with the client
• the BC Notary sets a signing appointment with the client
• the client reviews all of the documentation prepared by the BC Notary or conveyancing lawyer and identifies any disconnects
• the BC Notary or conveyancing lawyer corresponds with the lender to correct any errors or deal with any last minute funding requests
• the BC Notary sends a request for funds to the lender
• the lender approves the funding and puts the request for funds in the funding queue
• the lender wires, transfers or make the funds available for pickup to the BC Notary or lawyer
• the BC Notary or lawyer receives the funds, confirms they received the correct amount, accounts for any wire transfer fees or other surprise deductions
• the BC Notary or lawyer works with the lender, client and broker if they receive an incorrect amount

That’s a crazy amount of steps, isn’t it! If the lender uses a funding intermediary (such as Computershare or FCT), that adds another layer of complexity and delays to the process.

We like to have about two weeks from the time we receive the mortgage instructions to the closing date, so we have enough time to deal with any surprises, or other issues that arise.

When We Usually Get the Mortgage Funds

We usually get the mortgage funds on the Completion Date, and generally at one of three points in the day:

• first thing in the morning, around 6:00 am or 7:00 am (from organized funders who are good to go the previous day, and wire their funds overnight)
• in the 11:00-1:00 window (from lenders who needed to do final approvals in the morning)
• at the very end of the day (from lenders who are disorganized, who use a funding intermediary, or who insist we register prior to funding)

If your lender is one of the latter two types, we won’t get funding until they are ready to send it to us, regardless of when it’s actually needed.

Why Financing Delays Matter

Nothing can stop a home purchase faster than the mortgage money not arriving on the completion date. Buyers, sellers, realtors, notaries, brokers, and lenders are all counting on those funds being ready to go. If a lender doesn’t send them when they are needed, you could face penalties, extra costs, or even risk losing the home.

Here are some of the most common problems that cause financing delays in BC real estate transactions.

The Client Bottleneck: Missing Information

Your mortgage broker can’t send your file to the lender until they have all of your documents. This usually means:

• Income proof (pay stubs, employment letters, tax returns)
• Proof of down payment
• Bank account information
• Identification verification documents
• information about the property you are buying
• proof that you have appropriate property insurance in place
• confirmation is received that other funding conditions are met

When clients drag their feet and don’t provide these items quickly, the whole financing process slows down.

Broker vs. Lender Disconnect

Sometimes the broker and the lender are not on the same page.

A broker might give the lender instructions, such as the type of product, or interest rate, but the lender either can’t or won’t follow them. For example, maybe the lender has stopped offering that product the broker sold you on. Or their compensation package to the broker changed, making the broker unwilling to support that lender’s products anymore.

These disconnects can lead to delays or funding terms that don’t match what the broker told you.

The “Telephone Game” Problem

Like that old kids’ game of “telephone”, mortgage instructions pass through a chain: client → broker → lender → notary/lawyer. Details can get lost or changed along the way.

For example, a broker might have told the lender the property is going to be owner occupied, but the client tells the notary it’s rented. These mismatches can take hours—or even days—to sort out. Here are some substantial issues that could make the deal fall apart altogether:

• surprise rentals
• the client just retired, got fired, or hasn’t passed probation yet
• the client just got married or divorced
• the property has hazardous materials on it, or illegal substances
• the client has accepted a large gift they didn’t disclose

Forgotten (or Hidden) Facts

Some buyers “forget” to tell their broker important details, such as:

• That the property will be rented out
• Extra debt or loans
• Income from another job

If the lender discovers this late, they may add new conditions or refuse to fund altogether.

Last-Minute Conditions

Even when everything looks ready, lenders sometimes add new requirements at the last minute. Common ones include:

• requests to change the nature or extent of property insurance
• declarations as to the client’s source of income or asset base
• secondary appraisals or inspections
• clarification requests on a particular element of the underwriting process

These last-minute surprises can derail a smooth closing.

ID Problems and Wrong Math

Two of the simplest issues can cause the biggest problems:

• ID problems: expired ID, names that don’t match, or missing proof of authority for corporate clients
• Math problems: CMHC insurance premiums being higher than expected, or the down payment being calculated wrong. A buyer can suddenly find out they don’t have enough money in the bank on closing day.

How Buyers Can Protect Themselves

Here are a few simple steps you can take to help minimize the risk of a failed mortgage funding:

• Give your broker every document they ask for as soon as possible.
• Keep your ID up to date and make sure names match across documents.
• Double- and triple-check your math with your broker.
• Don’t leave your signing appointment with your notary to the last minute.
• Be honest about your plans (such as renting the property). Surprises only cause delays.

Conclusion

Getting mortgage money in on time is about preparation and communication. If you’re buying in BC, don’t wait until the last minute to get your documents ready. Small mistakes—like an expired passport or missing pay stub—can make the difference between a smooth closing and a stressful delay.

Call us if you have questions! Once we receive your Contract of Purchase and Sale, and your mortgage instructions, we’d be happy to discuss your file with you!