So you’ve found the property you want and have been accepted for a mortgage — congratulations!
But it’s worth keeping in mind that a mortgage offer comes with an expiration date. So, what happens if it’s taking a long time to complete the property purchase? Here’s everything you need to know about extending your mortgage offer.
What is a mortgage offer?
A mortgage offer is a written confirmation from your lender that your application for a mortgage has been checked and fully approved.
What’s the difference between a mortgage offer and a mortgage in principle?
A mortgage in principle (MIP) is something you can apply for even before you’ve found the home you want to buy. It’s a simple document that shows how much a lender may be willing to lend you, based on your current financial circumstances. It also shows sellers and estate agents that you’re serious about buying.
An MIP is usually valid for around 30-90 days, depending on the lender.
A mortgage offer in principle isn’t the same as a formal mortgage offer however. There’s no guarantee that a lender will offer you what’s on the MIP once you’ve completed an actual (and more in-depth) mortgage application.
How long is a mortgage offer valid for?
Most mortgage offers will be valid for 3-6 months. This is usually from when the offer is issued, although some lenders count it from when you first applied. It’s a good idea to double-check how long it’s valid for when you get your mortgage offer.
Those 3-6 months should, in theory, allow for the length of time it takes to buy a house, which includes property surveys and the conveyancing process. If the purchase isn’t completed in this time frame, though, you will have to extend your mortgage offer or reapply for your mortgage.
Note: If you’re buying a new build, you might be offered a bit more flexibility. This is because construction delays on new-builds are very common. It might be worth checking how flexible your provider’s extension policy is when you first apply for a mortgage.
Can you get an extension on a mortgage offer?
Yes, you can! Any bank, building society or lender that offers mortgages will be well aware of the hiccups you can come across during the house-buying process.
- Sometimes conveyancing searches can take longer than expected. These searches, which check to make sure your new property is connected to water and sewage mains and that the land isn’t on a flood plain or contaminated from previous use (among other important legal stuff), rely on third parties. If those third parties drag their heels, it can slow the entire home buying process.
- You could also be in a property chain, where several property sales are linked. If you want to buy a house, but you have to wait until the seller buys their next home, you’re in a chain. Again, you’re at the mercy of things outside your control when you’re in a property chain.
- Or, as we mentioned previously, your new-build developers could be experiencing setbacks due to labour or material shortages or bad weather.
With the above scenarios in mind, many lenders will often be happy to extend your mortgage offer, providing you give them enough notice and your circumstances haven’t changed much.
How long will the extension be?
How long you’ll be able to extend for will depend on your lender, but most allow at least a month. As a guide, Nationwide Building Society (Nationwide) will give you a mortgage offer extension of 45 days for new-build properties.
How do you get an extension on a mortgage?
The process for extending your mortgage is simpler than the original application.
If you’re at all worried that you won’t complete your purchase before your mortgage offer expires, it’s a good idea to speak to your lender as soon as possible. They might ask you to wait a short time to apply for the extension. For example, Nationwide will ask you to apply for an extension with 15-30 days left on your mortgage offer.
When the time comes to extend, your lender will ask you for proof that your circumstances haven’t changed significantly since they offered you the original mortgage. This will usually mean giving them bank statements and payslips from the last six months and a record of your spending.
What if I can’t get an extension on my mortgage?
Your lender doesn’t need to give you an extension. If they refuse, or you didn’t manage to apply for an extension in time, you’ll have to reapply for your mortgage. You could apply with the same lender or try someone else.
The basics you’ll need to provide are:
- ID documents
- Proof of name and address
- Proof of income and deposit
Proof of income and deposit will likely include:
- Your last 3 payslips
- Your last 3 bank statements, showing your name and address
- If you’re self-employed, your last 3 years of tax returns and tax year overviews (or however many you do have if it’s less than 3 years’ worth)
- Proof of other types of income, like bonuses and rental income
- Proof of your deposit (like a bank statement)
- If your deposit is a gift, you’ll need a letter from the person giving it to you confirming they don’t expect to be repaid
You'll also have to provide a record of your spending:
- Credit cards
- Personal loans
- Car finance
- Hire purchase agreements
- Student loans
- Existing mortgages
It’s a good idea to hold onto the information and documents you pull together for your first mortgage application, just in case you need to apply again.
Another mortgage application will involve another hard credit check — one that leaves a visible footprint on your credit report. Multiple hard credit checks can make it look like you’ve been declined for a loan or credit card several times in quick succession, which can affect your ability to get other loans or financing later on.
Check out our full article if you need a reminder of the mortgage application process.
My mortgage offer has expired. Can Habito help me reapply quickly?
If your offer has already expired, you can usually reapply for the same mortgage (if it still exists). However, if you have the time, there’s nothing stopping you from searching the market again to try and find an even better offer. Just remember there may be fees to pay again as it’s a new application.
The good news is, Habito can help you find a new mortgage offer quickly and easily. As a whole-of-market broker, our experts can search over 20,000 deals from 90+ lenders to get you the best mortgage deal around. Simply answer a few questions to get started.