What To Do If Your Mortgage Offer Expires
A mortgage offer typically lasts for three or six months, depending on the lender and product. This gives you time to find and instruct a solicitor, sell your current home if you need to and go through the conveyancing process. However, delays could result in the offer expiring before completion, and in the worst-case scenario you’ll have to start a fresh mortgage application from scratch.
Fortunately, there are steps you can take to avoid this happening.
Read the small print
Check the exact date the mortgage offer’s valid from as this could make all the difference when time is tight. “Some lenders offer a mortgage from the date of application while others from the date the offer is produced,” explained Adrian Anderson, director of Anderson Harris. “When an offer has expired you no longer have access to that rate or mortgage. Hence you need to know how long the mortgage offer will be valid for and make sure that the length is sufficient to give you time to complete or ties in with when your existing rate ends if remortgaging.”
Why do mortgage offers expire?
Many factors could lead to your mortgage offer expiring before completion. “These include mistakes on your mortgage application or problems in the property buying process,” said Clare Flynn, mortgage expert at Confused.com Mortgages. “Using a mortgage broker can be a good way to avoid making mistakes on your mortgage application, or applying for a deal unsuited to you. They can also stay in touch with all parties involved to reduce unnecessary delays, which helps reduce the chances of the offer expiring.”
What to be aware of with new builds
Although there’s no onward chain to hold you up when buying a new build, other issues could lead to late completion, resulting in your mortgage offer expiring. “With new homes, offers most often expire because of build delays,” said Rupi Hunjan, managing director of Censeo Financial. “Or there could be planning issues, legal issues or other unforeseen circumstances that delay handover.”
Extending your mortgage offer
Many lenders will provide an extension of at least a month on mortgage offers that are about to expire. “If timescales are expected to be long from the outset, selecting a lender with either a long offer or a good extension policy is extremely sensible,” said Thomas Jackson, managing director of Cooper Associates Mortgages. “Determining factors include whether the property is a new build, and whether you are purchasing or remortgaging. It is best to make the lender or broker aware at the earliest opportunity. This will ensure that the right steps can be taken at the right time to extend where needed. Your conveyancer can also potentially request a short extension if it is close to the final stages.”
Reasons why your mortgage offer may not be extended
Lenders have no obligation to provide an extension. The most common reason for rejection is because your financial circumstances have changed since your previous application. Perhaps you’ve changed jobs, become self-employed, or your earnings have dropped because you’re doing less overtime. Taking on new loans or credit debt will affect the decision too.
How can I reduce the likelihood of my mortgage offer expiring?
Warning signs of potential delays may be evident from the outset, as property expert Jonathan Rolande explained. “To avoid the issue, make sure that the property you’re buying is ready to go – for example, don’t obtain a mortgage if it’s a probate sale and there are still complications that could take time to resolve. Ensure the home has a valid EPC and that it doesn’t have any obvious problems such as cladding or block repair issues. Keep on top of the agents and solicitors to keep the sale progressing. Chain-free sales proceed fastest: if it’s not possible to find one, aim for the shortest chain possible.”
Reapplying after a mortgage offer runs out
If your request for an extension is rejected, your only option is to reapply for a new mortgage. Not only does this inevitably take time, but you’ll incur additional application, valuation and legal fees. Your previous application will show on your credit report, leaving a potential new lender questioning why the previous mortgage didn’t proceed and – as when applying for an extension – factors such as a new job or recent loan can affect your chances of getting the mortgage you want. And recent hikes in mortgage rates mean that a new mortgage is bound to be more costly than the one you were previously offered.
But there may be plus points too. If the property’s value is lower than last time, you won’t need to borrow as much, and an increase in salary, improved credit score or a higher deposit saved in the meantime could result in a more favourable deal.