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How long does a mortgage offer last?

How long does a mortgage offer last?
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The receipt of a mortgage offer from a lender means that you’re one step closer to buying a new house. But how long does a mortgage offer last? We take a look at this and a few key questions you might have regarding mortgage offers. 

What is a mortgage offer?

A mortgage offer is basically a confirmation that the lender is ready to give you a mortgage.

It signals that the lender has completed checks on your finances, has received and reviewed a valuation report of the property you want to buy and is now ready to give you a loan.

How long does it take to receive a mortgage offer?

This depends on the lender you’ve chosen and how quickly you supply the information they need. Providing all relevant paperwork and information as quickly as possible can help to speed up the process.

Most lenders issue a mortgage offer a few days after receiving a valuation report on the property you’re buying. The valuation process itself takes around two weeks on average.

So, if there are no hurdles in the process, you should receive a mortgage offer within three or four weeks of applying.

Is a mortgage offer the same as a mortgage in principle?

No. A mortgage in principle is a statement from a lender giving you an idea of how much they’re prepared to let you borrow. It’s based on your financial status.

You can request a mortgage in principle at the beginning of the application process. It shouldn’t be hard to get one once you’ve provided a few key documents and information such as your income, current financial status and credit score to your prospective lender.

But you should note that a mortgage in principle is not a guarantee that a lender will definitely provide you with a mortgage in the future. Still, it’s a useful thing to have. You can use it to show estate agents or sellers that you are serious about buying a property.

How long does a mortgage offer last?

Once an offer has been received, it’s usually valid for three to six months depending on the lender.

Some lenders will start the clock from the date the offer is first made. Others may start counting from the day you make your application. Some might have a specific completion date in place.

After the given deadline expires, you might be able to get a new mortgage offer from the same lender. However, it’s quite likely that the lender will reassess your eligibility. Your new offer might also be on different terms to the previous one.

If you are purchasing a new build property, some lenders might consider extending the mortgage offer length by a further three to six months.

Others might also extend an offer if you are a victim of events outside your control. For example, to help buyers who had been impacted by coronavirus, mortgage providers in the UK agreed to give customers who had already exchanged contracts the option to extend their mortgage offer for up to three months.

What should I do after receiving an offer?

If everything looks good with the offer, you can sign it and then return it to the lender.

The next step is to complete the purchase. Your solicitor will agree a date to exchange contracts with the seller. If the property’s in England, Wales or Northern Ireland, this is the point where you legally commit to buying it.

In Scotland, you will be legally committed once the respective solicitors reach a ‘conclusion of missives’. This is basically a binding contract between you and the seller. After this point, you cannot back out of the purchase without risking legal consequences.

Can I increase the offer?

You might be able to secure a higher mortgage offer if the price of the property goes up because of changing market conditions.

But you may have to first convince the lender that the property is worth the higher price. Alternatively, you could abandon the purchase and seek a different property that’s within your personal budget.

Can an offer be withdrawn?

Yes. Legally, a lender can withdraw a mortgage offer if your circumstances change. This can happen even after you’ve exchanged contracts.

The good news is that lenders rarely reassess a borrowers’ finances once they’ve completed their checks and made the offer. Mortgage offer withdrawals tend to be few and far between.

Still, it’s good to be prepared for anything. One way to protect yourself is to delay exchanging contracts until very close to the completion date. This way, you won’t be left with a contractual obligation to buy a house that you no longer have the means to pay for.

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