Getting a mortgage offer is one of the most significant steps in buying a house.
But how long does a mortgage offer last? Are you required to accept this timeframe? And can you negotiate on its terms?
Read on for answers to all these questions and more.
What is a mortgage offer?
A mortgage offer is an official confirmation from your bank on how much they are willing to lend you and what the repayment terms are.
It enables potential buyers to calculate how much they can afford when purchasing a property (by combining it with their deposit).
And it also makes them a more ‘credible’ prospect for property sellers.
To receive an official mortgage offer from a bank, a mortgage application needs to be completed. This involve giving banks information, including:
- ID documents
- Credit report
- Proof of address
- Proof of income
and more.
Many of these records typically need to date back at least three years before a bank accepts them.
How long does a mortgage offer last?
In most cases, mortgage offers last between 3 – 6 months. (The precise timeframe varies for each bank.)
Once a mortgage offer expires, applicants must re-apply for one.
What are the steps involved with getting a mortgage offer?
Most experts argue that preparing for a mortgage offer effectively happens long before an application is submitted.
For example, some people prefer to pay off any outstanding debts or build up their savings before applying.
The next step is getting the relevant paperwork in place.
However, a lender is not guaranteed to make an offer even if the correct paperwork and ‘on-paper’ finances are all in place.
Lenders will ‘stress test’ your finances to see if you can still meet repayments if interest rates rise.
Similarly, if you have a poor history of meeting your debt repayments, this will also count against you.
How long does it take to receive a mortgage offer application?
Once you submit your application, it typically takes up to one month to receive a mortgage offer.
This timeframe can vary depending on the lender and circumstances (for example, whether interest rates fluctuate).
At what point should I get a mortgage offer?
Many people prefer to get a ‘mortgage in principle’ before they even start viewing houses. This gives them total clarity about their price range.
However, you cannot make a full mortgage application until after your offer on the house has been accepted.
As part of this process, your lender will view the house you want to buy and complete their own valuation on how much it is worth.
This is for the lender’s benefit, not the buyer’s.
It may also impact how much they are willing to lend (conditional on their agreeing to the sale price).
Can a mortgage offer be withdrawn?
Yes, a mortgage offer can be withdrawn, which is a common reason that house sales fall through.
This can happen if the lender discovers you have provided inaccurate information in your application.
Alternatively, it may be withdrawn if your circumstances have changed. For example, a significant loss of income due to being made redundant.
When you receive a mortgage offer from a bank, the terms will outline the conditions upon which the offer can be withdrawn.
If you are unclear about these terms, you should speak directly to the lender or perhaps hire a solicitor to guide you.
You can port your mortgage if you do not want your existing mortgage deal taken away and are keen to transfer it to a new property you are buying.
Am I required to accept a mortgage offer?
No. Once you receive a mortgage offer, it is totally up to you whether you decide to accept it. You can also search for a different deal if you choose.
Can I negotiate on a mortgage offer I receive?
It is essential that you can realistically afford any mortgage offer that you agree to.
Ultimately, it is extremely rare for a lender to accept any negotiation on the offer they make you.
This will have been carefully calculated based on all factors. So, unless any of these have changed since the mortgage offer was made (e.g. a significant salary increase), you will be unlikely to have success.
A far better option is to contact other lenders and get a new offer from them.
Different banks have varying criteria for how much they will lend and to whom, so just because one bank has set your offer at a specific price does not mean it will be the same everywhere else.
What is a mortgage broker?
A ‘mortgage broker‘ is a professional who can arrange a mortgage between you and the lender.
Since they are experts in this area, they can shop around to find the best deals and most suitable lenders.
What is a mortgage grace period?
A mortgage grace period is when a borrower can make a late payment without being penalised.
It can vary for each lender, but it is usually up to two weeks.
Controversial 12-month mortgage grace period
Recently, a 12-month mortgage grace period was introduced in the UK. This means that a house cannot be repossessed within 12 months of the mortgage being purchased.
There is some controversy surrounding this legislation. Many organisations and experts hope it will be repealed.
In some circumstances, you can negotiate a temporary deal with your lender. A ‘mortgage holiday’ is one of the most common examples of this.
