How Long Does a Mortgage Offer Last?
Estimated reading time 8 minutes
Almost all steps of a house purchase can be fraught with stress, questions, and uncertainty. Sometimes the mortgage application process combines all three of those quite well. With various amounts of information needed by the lender, deadlines to be met and the worry that you might not get the answer you hoped for, it can all come to a head relatively quickly.
Sometimes though, it could be that you are offered a mortgage but are having cold feet yourself, or perhaps you now can’t find a property within budget or suitable for your needs. This begs the question, how long does a mortgage offer last? You may be ready to move and have things in place but someone else is holding you up, or you may need more time to think about the move, or you just can’t find the right property. Luckily a mortgage offer gives you a degree of time. Typically, a standard mortgage offer is valid for around 3-6 months. This allows you time to hunt for a property or wrap up any loose ends with the property you may currently reside in.
How to get a mortgage offer
Getting a mortgage offer is just part of the process, and it must be noted that it differs from a mortgage in principle or agreement in principle. When you approach a lender, there are some things you must do but before that – you need to have an idea at least of the property you wish to purchase.
Browse the property websites and visit the estate agents in the area. Get an idea of prices and affordability. Once you have an idea of the likely costs of a property and you have checked your savings account is still as healthy as you had hoped, you can start taking the steps towards obtaining a mortgage.
Before heading off to a lender, gather a host of documents that can help you. Proof of identity, proof of income, and bank statements covering the previous 6 months will all help.
If you get mortgage in principle (MIP) from your proposed lender you can then show the seller that you can afford the purchase. Just don’t confuse this with the mortgage offer itself. They are two very different things.
With an MIP in place you can start shopping around to see what mortgage may work for you. There are lots of lenders out there and sometimes a mortgage broker may be the best option. Once you have found some suitable mortgages, secure a property valuation report. This way your lender can see that the amount you want to borrow is realistic to the value of the house.
With the valuation report, an MIP, and your deposit all ready, you can approach the lender and apply for a mortgage. They will check over the information you have provided and have an answer for you in due course.
How long does it take to get a mortgage offer?
If you have provided all the information we have mentioned above and have no sudden changes in your financial situation, you can expect to receive your mortgage offer in around 2 weeks. Sometimes, it can be even quicker but at the same time, some people have waited over a month.
This can be in cases where more thorough checks are required, or you may have missed out some information on the application. The secret is to be as prepared as possible and be available should the lender have any questions. This will help ensure the process works as fast as possible.
To enable the smoothest possible process, ensure you have, as a minimum:
- 3 months’ worth of payslips
- 3 months of bank statements
- Proof of identity
- 3 months of utility bills
Of course, other lenders may require more information and if you have substantial outstanding debts, they may wish to see how you manage them. Missing out any required information can really hinder the speed of your application and even the chances of it being successful.
What is the difference between a mortgage offer and a mortgage in principle?
A question often asked to property professionals and estate agents is regarding the difference between a mortgage offer and a mortgage in principle (MIP). To answer in its simplest form, the mortgage offer is what the lender is willing to lend you. The mortgage in principle is purely to give you an idea of what the lender should be able to lend you.
Requesting a mortgage in principle is relatively straightforward and you will only need to provide some basic information whereas with an actual mortgage application, you will be asked to supply the lender with much more. Where a mortgage offer can last for up to six months, a mortgage in principle lasts for up to 90 days. If in this time you have not applied for a mortgage, you may have to secure another MIP.
An MIP also does not guarantee a mortgage offer so bear this in mind when applying.
How long is the mortgage offer valid for?
As we mentioned earlier, the mortgage offer should be valid for 6 months, but different lenders count this period in different ways. Some lenders will state that the offer becomes valid from the moment it is issued, others state the offer begins from the day you applied and others will set a date that the property purchase must be completed. Always check with your lender before applying so you are fully aware of how much time you have to get the property transaction completed.
Can a mortgage offer be extended?
With the way the property market currently moves, there are lots of people having doubts, asking questions and pondering whether they should pull the plug on buying property altogether. That is totally understandable and as a result can see people asking for extensions to the mortgage offer.
The decision to extend any mortgage offer is purely down to the lender, however, should your circumstances have remained the same, there is an increased chance of them saying yes. A mortgage offer can be extended in three or six-month periods but can also be as short as just one month so again, it is worth clarifying with the lender what their policy is. In some cases, the need for a mortgage offer extension is through no fault of your own. If you are looking to buy a new build, for example, there may be a delay with building work which pushes the completion date back. If this is the case, speak to your lender as soon as possible.
If your offer has already expired, then you will not be able to seek an extension and instead, will need to reply again.
What happens after the mortgage offer?
Once you have applied for your mortgage and received an official mortgage offer. You have, typically, 7 days to review the offer and make sure everything is as you want it to be. You can then inform your lender you wish to proceed and the process of purchasing the property can move forward. Once you have signed it, your solicitor will move on to exchanging contracts and this is where the process forms a legal agreement.
If after receiving the mortgage offer you have suddenly become unsure or decided it is not for you, you will need to inform your lender right away. You can either ask for an extension or cancel it. Just be aware that if cancelling, you may be charged cancellation fees among other costs. This can be expensive so make sure you give it some thought!
Can a mortgage offer be withdrawn?
Just like you can pull out of a mortgage offer (although at your expense) the lender can withdraw one too. The likelihood of this happening though is slim. A mortgage offer is granted based on your circumstances and if they have not changed, there is no reason for it to be withdrawn, unless the lender has other reasons.
However, should you lose your job, become unable to work or see the property you want lose value significantly, the lender may opt to remove the offer. This again though, is quite rare.
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