What Happens After a Mortgage Offer Is Issued?

So you’ve finally found the house of your dreams and are ready to apply for a mortgage. You may have already received a decision in principle, but you will now need to submit a full mortgage application. So what happens after a mortgage offer? where do you begin and how can you make sure you get accepted and the home-buying process runs smoothly?

What is a Mortgage Offer?

Once you pass a series of checks from the lender, you will get mortgage approval and they will issue a mortgage offer, which is essentially confirmation that the lender is prepared to lend you the amount requested for the property you are buying. One thing to note is that lenders will often only make a formal offer once they have undertaken a valuation of the property. The offer will outline any conditions the lender wants you to meet before they release the money.

What Happens After Your Mortgage Offer is Issued?

Checking the offer

Once you receive a mortgage offer, you may think that it doesn’t look like a riveting read, but it’s important to check through it to make sure everything is correct, such as the mortgage amount and term, interest rates, monthly payments and early repayment charges. Once you’ve checked, check again!

Accepting the offer

Once you have checked the mortgage offer and are happy with it, you can accept it. This often just means signing and returning the mortgage offer. Sometimes you can do this online, but if you need to send this back by post, we would recommend sending it by recorded delivery. If your mortgage offer has special conditions, you may also have to sign a memorandum of understanding, which outlines the agreement that has been reached between you and the lender. If you have any questions about any part of the mortgage offer, you should ask your conveyance.

Buying the property

Once you have signed your mortgage offer, it is unlikely that the mortgage offer will be declined, although a lender can legally withdraw a mortgage offer at any point before the sale. It is now the time for your solicitor to complete all of the legal work required for the purchase and agree on a date for the exchange of contracts and finally completion when you get the keys to your new property.

Can a mortgage be declined after the offer is accepted?

Although it is not common, at any point before the sale the lender can legally withdraw the mortgage offer. A mortgage offer could be withdrawn for a number of reasons, such as a change in your personal situation or a change in the purchase price of the property. For this reason, it is not advised to change jobs and take out any additional credit before you complete the property.

Similarly, if the lender runs a credit check and finds things like missed payments, this may be a red flag to them. As a result, they may consider it too risky to lend. However, in the case where you change jobs to one that is significantly higher paid, this might actually go in your favour with the lender being able to offer you more money.

How Long Does It Take For A Mortgage Offer To Complete?

There is no set time for how long this process takes. It usually takes 1-3 months, although, at the time of writing in 2022, purchases are taking around 5 months to complete. You can help to speed things up by keeping in regular contact with your conveyancer and the estate agent selling the property.

How long does a mortgage offer last?

Mortgage offers typically last 3-6 months. This is sufficient for a normal purchase, however, in the case where there are delays, for example when the chain is long, this offer may expire before the day of completion.

What happens if my mortgage offer expires before completion?

The good news is that if you contact your lender in advance if you know this is about to happen, they should be able to offer an extension. In the event that they cannot offer an extension, you will have to re-apply for a new mortgage product, which may not be on the same interest rate as your previous offer. Re-applying with the same lender, or if you used a mortgage broker, should be relatively straightforward as they will be able to use the same information you supplied previously.

What Can Go Wrong After The Mortgage Offer?

• The Mortgage is Declined
• The Mortgage Expires
• Your circumstances change meaning your lender withdraws the offer
• The lender runs a credit check and finds red flags
• A change to the mortgage market means lenders pull products

For more information

If you have any questions about the home buying process, please browse our library of articles or get in touch with Propertyable today.