Securing a mortgage offer for your first (or next) property purchase is a big, exciting step. But there are a few things you’ll need to keep in mind once you get the thumbs up from your lender.
At the top of the list is knowing how long your mortgage offer lasts, as this will help you map out the rest of the home-buying process.
Here, we explain everything you need to know about your mortgage offer.
What is a mortgage offer?
A mortgage offer is a confirmation letter you’ll receive from a lender or mortgage provider to let you know that they’ll lend you the money you need to buy your home.
It comes after you’ve submitted your mortgage application, which goes through a variety of background checks to make sure you can afford the repayments, as well as a property survey to see whether the value of the property matches the mortgage amount you’ve requested.
All being well, you’ll usually receive your mortgage offer within 2 to 6 weeks of submitting your application (depending on the lender), and it will include important details such as:
- How much the lender will let you borrow
- The interest rate that will be applied to the amount borrowed
- How much you’re required to pay each month
- The length of time you’re required to pay it all back
How long does an offer typically last?
All mortgage offers have a time limit.
Why? Because the offer is based on:
- Your income
- Your credit history
- The current interest rate
- Price trends in the housing market
And because these things tend to change over time, lenders can’t have their mortgage offers lasting forever. For instance, your credit score might fluctuate, or you might switch jobs during the application process. The time limit on the offer makes sure it closely matches your current situation.
The offer letter will include the length of the mortgage offer, so be sure to check the confirmation letter when it comes through the post or via email. Most offers last between 3 to 6 months (to allow time for the legal paperwork to be finalised), but this will depend on the lender.
Bear in mind that the start date of the offer can vary. The offer could begin from the date you applied or when the lender issued the mortgage offer. Before reaching out to a lender during the application process, you might want to ask about their policy regarding the mortgage offer start date.
What to do if your offer expires or seems to be expiring?
Contact your provider immediately if your offer is about to expire.
In some cases, your provider might be willing to offer an extension to give you more time to work through the other steps in the home-buying process.
It’s always better to be prepared for any snags when buying your first home, so if you’re a few weeks into the offer and something comes up, let your provider know ASAP. Keep in mind that an extension might require you to pay additional fees.
Sometimes, your lender might need a notice period of a few weeks before the mortgage expires. So, the sooner you let them know, the sooner they can help you. Just remember that a lender isn’t obligated to offer you an extension. If your offer expires before you’re able to complete your property purchase, you’ll need to re-apply for a mortgage – and that means shelling out more money for a fresh property survey, solicitor’s fees, the lot.
Keep your finger on the pulse of your property purchase with Habito’s complete home-buying service. We’re with you every step of the way, from mortgage application to mortgage offer to completion, and we can help you deal with any hiccups or delays.
How can you get an extension on your mortgage offer?
To get an extension, follow your lender’s instructions. In some cases, they might ask for your most recent bank statements or payslips to check your financial situation. They'll be interested in seeing whether your finances have changed and how it'll affect when and how you'll pay back the loan. By law, your lender has to make sure you can pay back the money they loan you.
Getting an extension on your offer will depend on several things:
- The reason for the extension
- Whether the lender will accept the reason for the extension
- How quickly you reached out to them about the delay
- How much time is left on the offer before it expires
- Whether your financial situation has changed since the offer was made
An extension will give you a bit more breathing room to get your ducks in a row. The duration of the extension will depend on the provider and whether you’ve requested extensions before.
Sometimes, the lender might refuse to extend the mortgage offer. If that happens, your next course of action is to re-apply for a mortgage.
How can you re-apply for a mortgage?
Delays happen during the home-buying process, and sometimes they’re unavoidable.
Issues such as pending construction work (especially for a new build) can often lead to your mortgage expiring before you get the chance to complete your property purchase.
When this happens, your only option is to re-apply, and you’ll go through the same steps as you did previously.
If your financial circumstances have remained the same between your previous application and the new one, there’s a good chance you might receive the same mortgage offer from the same lender.
Otherwise, your offer might be different if, between your first application and your new one:
- Your income has been reduced
- You’ve changed jobs
- You’ve increased your spending
- Your credit score is lower than it was
Remember, you might need to pay for another property valuation and additional conveyancing costs when re-applying.
Keep in contact with your lender as often as possible to take advantage of any extensions they might have to avoid wasting time and money. When you work with a mortgage broker (like Habito), they can communicate with the lender on your behalf.
What are the differences between a Mortgage in Principle and a mortgage offer?
It’s easy to mistake a mortgage in principle for a mortgage offer, but they’re not the same thing.
A Mortgage in Principle (MIP) is also known as an Agreement in Principle (AIP) or Decision in Principle (DIP). It outlines how much a lender might be willing to give you if you complete an application with them. This figure is not a guarantee as they’ll need to go through the usual checks to see if you can pay back the money.
Getting an MIP can be an advantage for the following reasons:
- You’ll have a good idea of the kinds of houses you can start looking at, as you’ll have a clear price range you can work with
- You can budget other expenses in the home buying process
- An MIP can act as a seal of approval as it shows the owner of a potential property that you’re a serious buyer and can afford the purchase
An MIP offer will last between 1-3 months. Remember that an MIP is not a guarantee, and the terms and amount are subject to change. Get yours for free with Habito.
Next steps: check your mortgage offer deadline
As a rule of thumb, you should note down the expiry date of your mortgage offer and keep that date circled on your calendar.
If your deadline is approaching, but you still need to finalise the legal side of things, let your lender know that you need more time. It’s better to deal with this ASAP to keep things moving.
Speak to a broker today about getting yourself a mortgage offer (and the keys to that dream home!).