How long does a mortgage offer last?
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How long does a mortgage offer last?
Jess talks to us about mortgage offers.
What is a mortgage offer?
A mortgage offer is official confirmation from a bank or a building society that they’ll lend you the money to buy or remortgage a particular property. To get to the mortgage offer stage, there are a fair few steps – but that’s ultimately where you end up in the house buying process.
What’s the difference between a mortgage offer and an Agreement in Principle?
An Agreement in Principle is one of the initial stages of the mortgage application process. This is where an advisor would submit basic information to the lender, who usually runs a soft credit search to ensure they could lend you the amount of money you’re asking for.
The Agreement is based on your income, expenditure, credit score and your credit commitments in the background. This is always subject to the full application, where the lender would request documents and underwrite the loan. As it says, it’s an Agreement in Principle – subject to the rest of the stages being met.
A mortgage offer is only issued once the lender has completed all their checks. It means they’re happy to lend to you based on the verification documents you’ve provided. They’re also happy to lend on the property based on their valuation. That’s when it all becomes official and the legal work begins.
What documents do I need to provide to get a mortgage offer?
The documents requested vary depending on the lender, what you’re applying for and your circumstances. It’s normally proof of ID and proof of address, plus proof of income.
If you’re employed, you normally need some pay slips. If you’re self-employed, it’s normally tax calculations and overviews, and if you’re a limited company director we need your business accounts. You will also need bank statements, to verify the income going into your bank account and your outgoings.
Occasionally lenders will request further documents such as proof of deposit or further bank statements for your business. It changes from person to person.
How long does it take to receive a mortgage offer?
Each lender is different, but they all publish current timescales on the websites we use as intermediaries. That lets us know how long it’s taking them on average to review an application, book a valuation in and underwrite the documents. Once those stages are done, it should go to offer.
The timing varies from lender to lender and also depends on how busy the mortgage market is. Once we’ve submitted the application, we’ll explain when you could expect an update. Some lenders will do it within a couple of days, others within a week – it’s never normally too long.
We like to get them through as quickly as possible – we know it’s a very nervous time waiting for your mortgage offer.
Is it quicker to get a mortgage offer through a broker?
It’s hard to say. But when you use a broker, we do all the legwork for you. We chase the underwriters, chase the valuation, upload all of the documents for you and keep everything moving by being in contact with the lender at all stages.
You could do this yourself and go directly to the bank. But chasing the bank could be hard because you don’t know what you’re chasing. Also, managing that around work and life commitments means you can’t always give lots of time to it, whereas this is what we do every single day.
We could spend the time on the phone, waiting on hold, getting everything chased for you. It could be quicker because we’re always on it, and we want to get you that mortgage offer as quickly as possible.
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What happens once your mortgage offer has been issued?
Once you have your mortgage offer in hand, usually you could have a little celebration that you’re over the first hurdle of the house buying process. It’s normally quite a relief.
After that, the solicitors receive their copy. It’s normally slightly different to the copy you would receive, as it includes the mortgage deed and further information they require. The solicitors’ legal work really begins at this point. You’ll have to pay fees so they could instruct searches.
They raise inquiries along with many other things in the background to get you to exchange and set a completion date. You’ll work side by side with the solicitor, providing the documents that they need for their checks and answering any questions they may have.
As a mortgage broker, we support you through that process – holding your hand, as it can be quite confusing. Legal jargon can be a challenge to understand.
Do I need to complete within a certain amount of time?
A standard mortgage offer is usually valid for around six months after being issued. That six month period is about how long the valuation is valid for, and how long the lender could offer that rate to you.
As you can imagine, the mortgage market changes all the time. What they could offer today may not be what they’re offering in six months’ time. Of course, six months is a long time when you’re waiting to move into your new home, you’ll want it to be sooner than that.
We normally estimate reaching completion between four to six months, and we try and keep it within four to five so that we’re not cutting it too fine before that offer expires.
How long do mortgage offers usually last?
They’re normally valid for six months. Some lenders do have shorter mortgage offers, and with others it’s longer. It all depends on what products they’re offering and the valuation they’ve completed.
What happens if my mortgage offer expires?
If your offer expires, some lenders will allow it to be extended for a set period of time. They might give you a further 15 days to complete, as a grace period.
Other lenders will allow you to extend it. Perhaps it’s a new build property and the build has been delayed, in which case it’s completely not your fault. In the worst case scenario where we’re unable to extend your mortgage offer, we may have to go back and start at the beginning. We would look at what mortgage options are available to you based on the market now.
Can mortgage offers be extended? How do I reapply if my mortgage offer expires?
Some lenders will allow it to be extended in certain circumstances, but not all of them. If it can’t be extended, that’s when reapplying comes into play.
To reapply, go back to your original mortgage advisor, as they’re going to have all the information on you and the property you’re looking to purchase.
They’ll be able to identify the most appropriate lender and the next steps. Hopefully that will get the ball moving a lot more quickly than starting from scratch with somebody new.
Reapplying is the same process – getting the Agreement in Principle, the mortgage application and getting a brand new mortgage offer, which then would be valid for a further six months.
Can a lender withdraw my mortgage offer?
It’s unusual, but lenders do hold the right to withdraw an offer if there have been any material changes to your circumstances that impact the mortgage they’re offering.
For example, let’s say when you apply for your mortgage you don’t have any debt at all, but between getting your mortgage offer and the keys to your new home, you decide to purchase a new car on finance, with a £400 monthly payment.
If, for whatever reason, the lender picks that up on credit searches, they might then deem that mortgage unaffordable because you’ve now got that credit commitment. They do withhold the right to withdraw it. Although it’s unusual, it could happen and we have seen it before.
How can a mortgage broker help?
We’re here for you to utilise our knowledge of mortgages and the process. We hold your hand the whole way through to make it as stress free as possible.
Even if your offer is due to expire, or there’s a chance your offer could be withdrawn, we’re here to find a solution and help you move forward. We want to get you in your new home – or with your new mortgage – just as much as you do.
Asset Harbour Mortgages & Protection Ltd trading as Asset Harbour Mortgages & protection are an Appointed Representative of HL Partnership Limited which is authorised and regulated by the Financial Conduct Authority.
YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.
There may be a fee for mortgage advice. The precise amount of the fee will depend upon your circumstances but will range from £99 to £549, and this will be discussed and agreed with you at the earliest opportunity.