Standard mortgage offers tend to be valid for three to six months, depending on the lender, although it’s usually less than that for specialist mortgages, somewhere between two and four months.
The reason mortgage offers have an expiry date is simply because material factors can change. For example:
- The Bank Rate may rise (or fall), meaning the lender needs to change your interest rate.
- Your personal financial situation could change, affecting your affordability profile and maximum borrowing, known as ‘Mortgage Capacity’.
- The property value might shift, in which case the lender might want to reassess the LTV.
You also need to be aware that lenders can withdraw your offer before the expiry date. Usually this would be either because of a change in your financial circumstances, which the lender might only identify when carrying out final credit checks, or if a property valuation came back at a significantly different level to the agreed purchase price. Although it’s rare, products and offers can also be pulled at short notice if the market experiences an economic shock.
So it’s important to know right at the outset how long your mortgage offer will remain valid, and also to ensure your financial position is stable and unlikely to change in the near future.
The best way to stay on top of things is to work with a mortgage broker who can manage deadlines for you. And if the process might take longer than average – e.g. if you are in a long purchase/sale chain or your seller is having trouble finding a property to move to – a broker can ensure you have an offer from a lender that’s likely to be flexible and extend the offer as necessary.
What happens if a mortgage offer expires?
If your mortgage offer expires before completion, that means the lender is no longer obliged to give you the funds. They may grant an extension, but in most cases you (or your broker) will have to make a fresh application.
Here are some steps you can take to help ensure your purchase goes through before your mortgage offer expires and you don’t encounter any problems with having finance in place for completion:
- Work with a broker to ensure the deadlines are clear and you know from the start whether the lender is likely to grant an extension. Also, find out whether there would be a cost to that.
- Be ready to provide all the information your broker and lender need as quickly as possible, such as payslips, accounts, etc.
- Use a good legal company that will be able to progress your transaction efficiently.
- Give your broker and conveyancing lawyer permission to talk to each other, and to the estate agent you’re buying through. Everyone progressing the sale should know and be able to stay on top of the deadlines.
- If you’re buying a new build, check the contract to make sure you’re not tied in if they change the exchange or completion date after your mortgage offer has been made. Your mortgage broker should be able to find an appropriate lender that understands new build purchases don’t always meet the original deadlines.
It’s also worth finding out early on what fees and costs might be refundable if the purchase can’t proceed with the original mortgage.
Steps to take if your mortgage offer expires or is withdrawn
- Make sure your conveyancing lawyer and estate agent know as soon as possible so they can work with your vendor and any other parties in the chain to keep the purchase/sale in place.
- Have your broker formally apply for an extension.
- If the lender won’t grant an extension, re-apply for the mortgage. If interest rates have changed, you might even benefit from a cheaper mortgage or better terms.
- Getting a new mortgage offer could take several weeks, and if it looks as though the purchase might fall through, consider applying for bridging finance so you can proceed. This is a high-interest temporary loan to bridge the gap until the mortgage is granted, so it will add to the cost of buying – but if it means you secure the property you want, it may be worth it.
If you would like to discuss your mortgage options, our team of brokers is always here to help. You can get in touch with us by completing our online form, chatting with a support agent or calling us directly on 0800 144 4744.
