Getting a mortgage offer is a great cause for celebration. Your hard work has finally paid off! But if you look a little harder, you’ll see that your mortgage offer also comes with an expiry date. This means that you have to complete your house purchase before a certain date in order for your offer to be valid.
Don’t worry, it sounds scarier than it is! We’ve taken a look at how long your mortgage offer could last and what happens if it expires.
First things first: what is a mortgage offer?
A mortgage offer is what we call it when your mortgage lender has checked and approved your application. In other words, it means a mortgage lender has confirmed they’re happy to give you a mortgage. Hooray!
Before giving you a mortgage offer, a lender will need to assess information about:
- You and your finances. This includes your job, salary, income and expenses.
- The property you’re hoping to buy. Your lender will want to check you’re not overpaying for the property by carrying out what’s called a ‘valuation survey.’
It can take a mortgage lender anywhere from 2 to 6 weeks to carry out these checks (read our guide to how long a mortgage application takes for the full lowdown). Once you get a mortgage offer, that means the wait is finally over. Crack open the champagne!
How long does a mortgage offer last?
Most mortgage offers are valid for 3 to 6 months. But every lender is different, so it’s always worth checking exactly how long yours will last for. For instance, while most lenders will start the clock from the moment you get the offer, others will go from the point you made the application.
We know what you’re thinking: why does it matter? Surely you’d want to get the house purchase done as soon as possible anyway?
Well, there’s still a lot of legal stuff that needs to happen before you can actually buy your house, known as ‘conveyancing.’ Only when both your solicitors and the seller’s solicitors are happy can you actually go ahead and exchange contracts (legally commit to the house purchase) and complete (pick up the keys to your very own home!).
Your mortgage offer needs to last for at least a little while, so that you have the chance to finish the legal stuff before it expires. The longer your offer lasts for, the more the pressure’s off!
What happens if a mortgage offer expires?
Obviously you want to get your house purchase done and dusted before your mortgage offer runs out. But there’s always a chance that’s not possible, especially if you’re buying a new-build property (why is it that construction work never seems to run on time?!).
If it looks like your mortgage offer is going to expire, don’t panic! Most mortgage lenders are pretty understanding in situations like this and they’ll normally be happy to offer you an extension. Just make sure you contact them before your mortgage offer expires as they’ll normally need a few weeks’ notice to sort something out for you.
That said, your mortgage lender doesn’t have to offer you an extension. So, what happens if your mortgage offer actually expires?
Well, sadly, there’s not a lot you can do – apart from simply reapply for a new mortgage!
Thankfully, as long as your situation hasn’t changed much, it’s pretty unlikely that you’d be rejected for a new mortgage. After all, you’ve been here before! However, you will need to go through all the same checks again. So, if your income has dropped significantly since you last applied, or your credit score has gone down, you could run into some problems.
We’d always recommend using an independent mortgage broker as they’ll be able to advise you every step of the way. Plus, they’ll even fill out the application for you, so you can pretty much just sit back and twiddle your thumbs. You’re welcome!
What’s the difference between a mortgage offer and a mortgage in principle?
Before you find a house and submit your mortgage application, you can ask for a ‘mortgage in principle.’ This is an official document that says you’re likely to get accepted for a mortgage if you apply for one, and how much for.
Having a mortgage in principle will show estate agents and sellers that you’re a serious buyer. In fact, many won’t accept an offer (or even let you view a property!) without one. Plus, it’s a great way to find out whether a mortgage lender is open to approving you for a mortgage without applying outright and risking rejection!
A mortgage in principle will usually be valid for 60 to 90 days, although this will depend on the mortgage lender. If you find a house you like within this time, happy days! You can simply apply to get your mortgage in principle turned into a mortgage offer.
If you don’t find a property within this time, that’s okay. You don’t need to have a mortgage in principle to apply for a mortgage. That said, if you do still want one, you can just reapply for another. Simple!
You've got loads of time
So, as you can see, there should be plenty of time to get your house purchase completed before your mortgage expires. But if you are starting to approach the expiry date, it’s not the end of the world! Just get in touch with your mortgage broker (or your mortgage lender if you don’t have one) with plenty of time to spare, to see if you can get it extended.
Good luck (not that you need it!).