The time a mortgage offer lasts varies between lenders, but as a ballpark figure you should expect your mortgage offer to last between three and six months.
Some lenders will only provide mortgage offers that start from the date the offer was made. Others will start the countdown from the date your application was submitted, and some will have even more specific terms in place which give you a deadline for completion. Whichever one applies to your lender of choice, make sure you understand the terms and conditions before you start the application process.
So what is a mortgage offer?
A mortgage offer is an official confirmation from a lender – typically a bank or building society – that they have agreed to lend you the amount needed to buy a property. Easy!
How long does it take to get a mortgage offer?
It usually takes two to four weeks to receive your mortgage offer after submitting your application, although it can take much longer if your lender has to wait to receive all the necessary information from you.
The time it takes really depends on the lender, how quickly you return all the required financial evidence – such as bank statements and wage slips – and the nature of the transaction, as some properties are more straightforward to buy and sell than others.
What’s the different between a mortgage offer and an Agreement in Principle?
It’s easy to confuse an Agreement in Principle (or AIP) with a mortgage offer, but there’s a big difference. An agreement in principle is a statement from a lender that they are, in theory, willing to lend you a certain amount of money based on the evidence you have shown them. It’s not a formal offer of a mortgage, but it does indicate what price range you could look at when you’re house-hunting, and it shows the seller that you can make a serious offer. When you actually apply for your mortgage you don’t have to go with the same lender you got your AIP from, although it might make things easier. An AIP also isn’t a guarantee that you will get that mortgage.
An Agreement in Principle lasts for a shorter period than a mortgage agreement – usually 60 to 90 days. Be careful not to apply for too many Agreements in Principle as doing so can have a negative impact on your credit score.
A mortgage offer, on the other hand, is a formal agreement that involves extensive underwriting checks. You may find that the final amount differs from the Agreement in Principle once your full application has been completed.
A valuation report for the property you want to buy is usually a prerequisite of the formal mortgage offer. These offers are given with a specific deadline, which should be enough to finalise the sale of the property. However, sometimes things stall – often for reasons outside your control – and the mortgage offer may expire.
What should I do if my mortgage offer has expired?
In the vast majority of cases, a mortgage offer will leave you with enough time to complete the purchase of your new home. In some circumstances, however, this is not possible – for example, when a new build home is subject to delays or it’s impossible to predict the completion date.
Most banks and building societies will let you renew your offer if it has expired. Lenders generally understand that buying a property is a complex and lengthy process, and that many delays are outside your control. However, you need to be aware that your lender is not legally obliged to extend the term of the mortgage offer, and it’s your responsibility to reapply in good time.
How to reapply for a mortgage offer
If you do need to reapply, the process should be relatively straightforward, unless one or more of the following apply:
- Your income has decreased;
- Your employment has changed;
- Your expenditure has increased;
- Your credit score has dropped.
It’s important to keep communicating with your lender throughout the process. If you feel that delays are likely, or if your financial position has changed, let them know – it’s important that you’re both on the same page so you can move into the home of your dreams as easily as possible.
