Once you’ve been approved and issued with a mortgage offer, the clock starts ticking and you’ll need to ensure you reach completion of the property purchase within a set period of time. Mortgage offers have an expiry date and it’s important to be aware of this when buying your new home. So, how long does a mortgage offer last?
How long does a mortgage offer last?
A mortgage offer usually lasts between 3 and 6 months, though this will depend on the lender you’ve been working with. Buying a property isn’t a simple process though and it’s common for issues to delay the sale. If you’re likely to run beyond your mortgage offer’s expiration date, you’ll likely need to request an extension or even possibly reapply. Usually this isn’t an issue, lenders are aware of the issues and delays that can occur when you’re trying to buy a property and so have systems in place to help with this.
When you’re approved for a mortgage, your lender will send an offer letter to both you and your conveyancer. In this official mortgage offer letter, it should state clearly when the offer will expire. Usually the length of time is enough to ensure surveys and conveyancing can take place prior to the sale. If for any reason, it’s looking unlikely that you’ll complete the purchase prior to the offer’s expiration date, it’s important to communicate this with your lender.
Mortgage offer vs. agreement in principle
It’s important not to be confused between an official mortgage offer and an agreement in principle. An official mortgage offer means that you’ve completed the full application process and lender checks and you’ve been accepted for the mortgage requested. An agreement in principle is a lender’s general guidance of how much they’d be willing to offer you (if you pass their application process). An agreement in principle will last roughly 90 days.
Can I extend a mortgage offer?
It’s usually possible to extend a mortgage offer if you think it’ll expire before completion. If you think you’re likely going to need to extend your mortgage offer, speak to your lender as soon as possible about this. Open communication is always the best route forward here. Lenders are well aware of the issues that can delay completion of a house sale and are used to this. They are usually accommodating and understanding about this.
Be aware though, your lender has no obligation to extend your mortgage offer or accept your application if you reapply.
When deciding whether to extend your offer, your lender will look at the circumstances that have led to the delay. Give them as much detail and be as forthcoming as possible here. Offer extensions are usually made on a case by case basis, so the devil’s in the detail. When you first apply for a mortgage, it’s always a good idea to find out what your lender’s policy is for extensions.
What will I need when asking for an extension?
When asking for an extension to your mortgage offer, you’ll usually have to show your lender up–to-date bank statements and / or payslips. This is to prove that your financial position hasn’t changed since you first applied. This is all about ensuring that you can still afford to borrow the amount of money originally offered.
You’ll also need to give your lender a couple of weeks notice prior to extending your offer. The exact length of time will be written in the terms of your offer (or the lender’s policy). This is why it’s important to notify your lender as soon as possible of the situation. Each lender’s notice period differs slightly, so it’s worth asking about this early on.
How long will a mortgage offer be extended?
This very much depends on your circumstances and how long you feasibly need to reach completion. Again, this is why it’s important to be forthcoming about the circumstances surrounding why you’re requesting an extension. Usually a mortgage offer will be extended by a month, though it can be longer. The length of time a mortgage offer is extended is entirely at the discretion of your lender.
Can a mortgage offer be withdrawn?
Your lender has the right to withdraw a mortgage offer at any time, regardless of whether you’re asking for an extension or not. This often happens when they become aware of any changes in your circumstances or they’re concerned about your ability to repay the loan they’re offering you.
When you request an extension, your existing offer will be looked at again, as will your financial circumstances. If anything has changed, there may be a risk that your lender withdraws your offer as a result. This is why it’s important not to borrow any further money during this period or make any large financial commitments.
It is possible to reapply when a mortgage offer is withdrawn, though this is usually done for a reason. If you reapply, you may not be offered the same amount of money as before and may even be rejected.
Reapplying for a mortgage
Reapplying for a mortgage can be frustrating. This takes time and effort and can really put the completion of your new home in doubt. This can often delay the sale of the property even further. If you need to reapply, don’t waste time, do this as soon as you possibly can.
Your circumstances may have changed during the period between being offered a mortgage and this offer expiring. If so, this will likely be reflected in your new application process. For example, if your circumstances have changed for the worse, you may not be offered as much as before. Whereas, if your circumstances have changed for the better, you may be approved for a larger sum of money that was originally offered. If this is the case, you may not wish to use the same lender as before.
If you do reapply for a mortgage, you may need to pay additional costs associated with this, such as a property valuation and conveyancing.
Buying a new build property off-plan
Buying a new build property off-plan can throw a spanner in the works when it comes to mortgage offers. This is because it usually involves buyers purchasing a house before it’s actually been built. This means there’s a lot of room for error and plenty of issues could arise prior to the property being completed. If there are any delays, a mortgage offer can easily expire before completion takes place.
This isn’t an uncommon issue and there are lenders which specifically offer mortgages for longer periods of time than usual. This is where a mortgage broker can really make their money. It’s worthwhile discussing your situation with them so they can find you a mortgage that’s more suitable.
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Last Updated: December 23rd, 2021