It is a huge relief when you receive your mortgage offer but, as we all know, life doesn’t always run smoothly.
There can be all kinds of delays during the house buying process and it can be stressful worrying about your mortgage offer running out if unforeseen issues crop up.
Note: A mortgage offer is not to be confused with an ‘Agreement in Principle’ (AIP). An AIP gives you an idea of how much a mortgage provider is willing to lend you, based on the financial information you have given them. This is useful for showing estate agents and sellers that you are in a position to buy, and it gives you an idea of the price range of properties you can look at.
In this article, our expert team at PIL, a leading mortgage broker in the Southampton area, answers practical questions we are often asked about mortgage offer deadlines.
To obtain a mortgage offer, you will have to have provided your lender with all the information they have asked for, including your financial situation – income, outgoings, debts, credit score and so on, for them to thoroughly check.
Once your lender is satisfied with all your documentation, it will commission a surveyor to complete a valuation report on the property. The purpose of this survey is to confirm that it is worth the purchase price.
This is crucial because, if you default on your mortgage payments, the lender will want the reassurance of knowing it will be able to recoup its investment by selling the property for at least the value of the loan outstanding.
Most lenders will issue a mortgage offer within a week of receiving the valuation report.
Until you receive official written documentation confirming that your application for a mortgage to purchase a certain property has been approved by your lender, you will not be able to proceed with the purchase.
This means that having an in-date mortgage offer is absolutely essential.
It varies from lender to lender, but a mortgage offer will be valid for a fixed period of time, usually between three and six months.
If you expect your house buying process to be lengthy, then a lender’s time frame for keeping their mortgage offer open could be a key factor in choosing your lender, so read their terms and conditions carefully.
Also, check how the lender defines the start date of the mortgage offer. In most cases, this will be the day they offer it to you. However, in some cases, the clock will start ticking from the day you apply for the mortgage.
The expiry date of your mortgage offer will be made clear in the offer documentation the lender sends you. In certain circumstances, especially in exceptional circumstances beyond your control, the lender could choose to grant you an extension to your mortgage.
If you get a mortgage extension, the offer may be extended in its current format, or it may mean a change in your mortgage deal, or it may require a re-valuation of the property.
Yes, but only if the circumstances you were in when you received your mortgage offer have changed, for example if you are diagnosed with a critical illness, you lose your job or if the property’s value goes down.
If your mortgage expires, you have to reapply and go through the whole process again, including a new credit check. Although having to reapply for a mortgage will take more time, if your circumstances haven’t changed much since you applied the first time you are likely to be approved for the mortgage again.
Talk to your mortgage provider as early as possible if you think your house buying process is looking like it will be delayed. They sometimes have a minimum notice period and the earlier you speak to them the better chance you have of getting an extension on your mortgage offer.
It depends on the situation, how close to the expiry date you are, and it also depends on each particular lender, but it is usually three to six months.
Your request for a mortgage offer extension might be refused if you apply too close to the expiry date or if your financial circumstances have significantly changed since you first applied. Your only option is to reapply for a mortgage, going through the same process as the first time.
Common reasons for a mortgage offer expiring before completion include…
A mistake on the mortgage application, whether it’s a spelling mistake or inaccurate information, will slow down the process which is significant if the term of the offer starts on the day your application is submitted. This is why it is helpful for an expert mortgage broker, like our team at PIL Southampton, to carefully check through your mortgage application before it is submitted to lenders.
If your property is a new build, its construction could be delayed by bad weather or the contractor having problems getting hold of supplies and so on.
The house buying process can turn out to be longer than you expected; there could be issues getting the money together to pay the deposit, or if the chain breaks down, or if you are currently renting and you don’t give notice on your rental until you exchange.
Also, you are in the hands of the conveyancing solicitor and the mortgage valuer. If they are particularly busy, or searches take longer than expected, you may have to wait longer than you would expect for them to carry out the tasks you need them to do in order to complete the property purchase process.
Our team of knowledgeable and experienced mortgage advisers can help you with your mortgage application, to make sure there are no mistakes that could delay the process.
They will also be aware of each lender’s offer periods, to help you decide which lender to go with that will best suit your needs and circumstances.
Our expert mortgage advisers are here to guide you through the mortgage process, every step of the way. You can email us, fill out the contact form on our website or call us on 02380 668407. We look forward to hearing from you.