When you take out a mortgage, there is an agreed mortgage term between lender and borrower; however, this can be extended depending on the circumstances.
Taking out a mortgage can be a long and confusing process for many first-time buyers. Here, Octagon Capital explores exactly what your mortgage offer entails, and if possible, how to extend this past the initially agreed mortgage term.
What Is a Mortgage Offer?
A mortgage offer is confirmation from the mortgage provider that your application has been checked and approved.
You will only receive this confirmation once you have completed the application process fully and provided all the required financial documentation and information about the property you wish to purchase – this can include the following:
- Proof of ID
- Proof of income
- Proof you can afford repayments on the mortgage
- A valuation report on the property
Once you have been given a mortgage offer by the provider, this offer will be valid for a set amount of time – which is typically anything around 3 – 6 months.
How Long Do Mortgage Offers Last?
Mortgage offers are usually valid between 3 – 6 months, depending on the mortgage provider. Mortgage offers will only last for a set period of time, this period typically starting from the moment the offer is issued to the prospective borrower. However, lenders can also start the clock on this offer from the date you first applied for the mortgage.
It’s important to know the date your mortgage offer expires, and make sure as best you can that this works for you and fits around your schedule.
Can I Get a Mortgage Offer Extended?
If you are concerned that the house purchase will not be completed within the time frame of the mortgage offer, always speak to your lender first to explain your concerns. Delays are part and parcel of the housing market so lenders should understand if there are any unexpected events that will affect the timeline of purchase. However, the lender is not obliged to extend or re-offer the mortgage.
Depending on the circumstances, it is possible that your lender can offer you a mortgage offer extension. This may be due to personal circumstances, an issue within the housing chain of this particular transaction or at a more global level, such as the coronavirus pandemic.
For example, due to the coronavirus pandemic, many lenders opted to extend their mortgage offers by as much as three months across the UK. Many banks continue to offer extensions so it is always worth checking with your specific provider. Generally speaking, mortgage extensions are reviewed on a case-by-case basis.
What Requirements Are There for a Mortgage Extension?
If you are looking to get an extension on your mortgage offer, your lender will most likely want to see any recent bank statements and payslips. This is in order to check that your financial situation has not changed. Lenders will need to ensure that you are still able to pay back the agreed loan.
Additionally, lenders will require at least a few weeks’ notice in order to see if it is possible to extend your mortgage offer. This will differ between lenders so you will need to check notice requirements directly with your lender.
How Long Can a Mortgage Offer Be Extended?
The length of time that a mortgage offer can be extended will depend on the lender and will usually be evaluated based on an individual case. Lenders will typically take into account the circumstances of the property itself as well as the financial profile of the borrower.
In general, mortgage extensions could be up to a month or more, depending on the situation. For example, one of the UK’s biggest mortgage providers, Nationwide Building Society offers extensions of up to 45 days for those purchasing new-builds and who have come into problems with timings.
How Do I Request a Mortgage Extension?
In order to request a mortgage extension, you have to speak directly to your mortgage lender. The majority of lenders will require at least a few weeks’ notice before extending the mortgage and will need to evaluate many different factors. Lenders are not obliged to provide a mortgage extension, however if your financial situation is unchanged since your initial application, it is unlikely that there will be any issues. The typical mortgage extension will be a month or more.
What Happens if My Mortgage Offer Expires After Exchange?
If your mortgage offer expires between exchange and completion, you should contact your mortgage lender as soon as possible to request an extension.
Typically, your mortgage lender will let you extend your mortgage offer. However, when needed it’s important to try and apply for an extension as early as you can, just in case your lender doesn’t allow you to extend – giving you more time to make other arrangements.
If you’re not allowed to extend your mortgage offer, you may then need to create a whole new mortgage application. This can be done either with the mortgage lender you’ve initially gone with or another one that’s more suitable for your situation.
Can Banks Refuse a Mortgage After Exchange?
Banks and other mortgage providers have the right to refuse to offer a mortgage after the exchange of contracts has happened and, indeed, can withdraw a mortgage application at any point before completion if they have grounds to do so.
