How long does a mortgage offer last?
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How long does a mortgage offer last?
Kevin Dunks talks to us about mortgage offers, including how they work and how long they last.
What is a mortgage offer?
A mortgage offer is a lender’s formal agreement to lend money, subject to terms within the offer document.
What’s the difference between a mortgage offer and an Agreement in Principle?
An Agreement in Principle, sometimes called a Decision in Principle, is confirmation that you’ve passed a credit and affordability check based on what’s been shared with the lender.
It’s done prior to a lender checking your income evidence and a valuation. It’s the furthest point you can get to without having found a property to purchase.
Once the lender has completed their checks on the circumstances and the property is suitable security, they then issue the full mortgage offer document.
What documents do I need to provide to get a mortgage offer?
This depends on the individual circumstances. With technology developments, some lenders won’t ask for anything, because they use open banking and other tools. But more typically they will ask for evidence of your income and instruct a surveyor to complete a valuation of the property.
How they approve your income will vary depending on your circumstances. Most commonly for employed people, they’ll ask for payslips, and for self-employed people or business owners, they’ll either ask for tax returns or an accountant’s reference.
We always start the journey by listing your objectives and client circumstances to find the right lender. As an example, if someone is starting a new job next month, asking for payslips is not much use. In that case, we’d go to a lender that accepts a job offer letter or an employment contract.
How long does it take to receive a mortgage offer?
Typically speaking, we will have a full mortgage offer document within five to ten working days of getting the income evidence on file – it’s not too long.
Is it quicker to get a mortgage offer through a broker like yourself?
In the majority of circumstances, yes. A good mortgage broker will have already checked you fit the criteria and knows how best to present the evidence to a lender for a smoother, quicker process.
What happens once your mortgage offer has been issued. What are the next steps?
At this point the lender is ready to release funds. The request for those funds comes from the solicitor representing the lender.
That request won’t be sent from the solicitor until they’ve checked that the property is legally sound on paper. On a remortgage, this is a very quick process, but on a purchase it typically takes 10 to 16 weeks from when you’ve agreed a price with the seller. We have a fast-track checklist to help sellers and buyers through a smoother transaction.
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We will save you time by researching the market, checking that you meet the lenders criteria to find the best mortgage for your circumstance.
Do I need to complete within a certain amount of time?
Yes, formal mortgage offer documents will have an expiry date, but we can often get these extended – although not for an infinite amount of time.
How long do mortgage offers usually last?
It does vary, but most commonly they are valid for six months from the issue date. On a new build, they may be valid for nine months. Some niche lenders might issue a document that’s valid for three months, so if you have any time pressures, it’s worth mentioning that from the off with the broker.
What happens if my mortgage offer expires?
The majority of lenders will extend the offer, but only by a few weeks. If the delay is longer, it’s normally back to the starting block: the broker completes the research, you reapply for the mortgage, provide up-to-date proof of income and a new mortgage offer document is issued.
How do I reapply if my mortgage offer expires?
It’s a team effort. Your broker will take care of it for you and guide you through the process. It’s worth being aware that mortgage products will be different – they do change.
Can mortgage offers be extended?
Yes, but with most lenders it’s only by a few weeks. If you’re buying a new build, a good broker will choose a lender where the offer can be extended further – as often the new build isn’t ready on time.
Some lenders offer longer extensions, but commonly it’s just a couple of weeks.
Can a lender withdraw my mortgage offer?
They can, but it’s very rare. To avoid this happening, don’t take on any new credit after you’ve applied for a mortgage, or prior to the transaction completing. Make sure your conduct on any credit agreement is satisfactory and within the terms.
You’ve demonstrated this throughout the episode, but how can a mortgage broker help?
Mortgage brokers are very useful when transactions are taking longer than expected. We empathise, and we take the pressure away from you to get the offer extended. A good broker is a solution finder – that comes with the job.
We speed the transaction along and do everything we can to bring it to a conclusion before the offer expires.
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What you need to know…
The actual amount you can borrow will depend on your credit commitments, your regular monthly outgoings and how each lender assesses your income.
Lender’s affordability checks can differ meaning that the amount you can borrow may change from lender to lender. That’s where the expertise of our personal advisers comes in and where our independent status benefits you.
The minimum deposit required is 5% of the property purchase price. Most lenders will allow the deposit to come from a gift and some lenders will even consider this being raised via a personal loan. There are government incentives to help boost your savings if you are a first time buyer. Depending on your circumstance you may either need to have a larger deposit or will perhaps want to put a larger deposit down, due to preferable interest rates.
Because we are independent mortgage brokers we will be able to secure you the best deal for your circumstance.
An Agreement in Principle, also known as a ‘Decision in Principle’ will be provided after affordability and credit checks have been approved. An Agreement in Principle is extremely useful to increase your confidence when viewing and offering on properties. Estate Agents will typically want to see an Agreement in Principle before presenting your offer to the seller. Our personal advisers can help you with this.
It’s a requirement of your mortgage to have buildings insurance. This covers the bricks and mortar of the property.
It’s also a good idea to take advice from your personal adviser on protecting you and your loved ones if something bad happens. For example: Life Cover, Critical Illness Cover and Income Protection.
Being accepted for a mortgage does depend on your circumstances. We are experts with all types of mortgages…. We specialise in obtaining mortgages for the self-employed, contractors, construction industry scheme (CIS) workers and those with historic adverse credit (as well as employed people of course). In all these situations we can frequently secure high street deals. Being independent and experts is a real benefit in these circumstances.
Your monthly payments will vary depending to your chosen mortgage term, choice of mortgage product, how much deposit you have and repayment type. It is best to chat with a personal independent adviser to find out exactly what interest rate and term you can secure to give an accurate monthly payment.
Most of the first time buyers we have helped secure a mortgage are paying less on their mortgage than they used to pay on rent. This does, however, depend on circumstances. The mortgage term chosen is a major factor which can be dictated by your age and intended retirement age. Of course, it is also worth noting you are paying back the mortgage and once it is repaid you won’t have any rent to pay.
There are costs associated with purchasing your first home. You will need to pay legal fees and other potential costs include a survey fee, stamp duty (which is a property land tax) and administration fees. There are First Time Buyer government incentives on savings and stamp duty that can help you with raising the monies for a deposit, costs and reducing stamp duty. Our personal advisers can give guidance within a free consultation.