Are you thinking of taking your first step on the housing ladder? A key part of the process involves securing the right mortgage deal as a first time buyer, but what happens if things don’t go to plan and your purchase takes longer to go through than you first hoped?
We’re here to explain what your options are if your mortgage offer expires between exchange and completion, and whether extending your mortgage offer is possible.
How long do mortgage offers last?
You may not be aware, but all mortgage offers come with an expiry date, meaning that the purchase of your property should be complete before this date passes. Unfortunately this doesn’t always happen if the finalisation of the purchase takes longer than initially planned.
Most mortgage offers can last anywhere from 3 to 6 months from the issue date. This will vary lender to lender, and don’t think that because you’ve accepted the offer that the clock stops; you’ll still need to complete your purchase before the deadline is up.
Is a mortgage offer extension possible?
Banks and building societies know that buying a property can be a complicated process, with things often taking longer than anticipated, it is likely that most lenders will let you extend your mortgage offer if you need to.
The most important thing to do if you’re close to completing the purchase and a setback occurs is to speak to your mortgage adviser or lender as soon as possible. Most will ask for advance notice of this, which may mean that you need to get in touch with them a few weeks before your mortgage offer is set to expire. However the sooner you speak to them, the more likely your chances of getting your mortgage offer extended are.
If your mortgage offer expires before completion, depending on your lender you may be able to extend this over a month, however it’s important to be aware that there may be a requirement to show them your bank statements and payslips for the past six months so that they can see whether your situation has changed or not. For this reason, you should try to avoid taking out new credit or increasing the balances or your existing credit until the mortgage completes.
What happens if your mortgage offer extension is refused?
You might be surprised to learn that mortgage lenders are under no obligation to offer you an extension if your mortgage offer expires, and this means you may need to re-apply for your mortgage again.
If your mortgage offer extension is refused, you will need to pay for another valuation on the property. In addition, you may also lose the solicitor’s fees and if you have spent any other funds to secure your new home to date then these may also be lost too, so it’s important to move quickly and contact your mortgage lenders at any sign of a delay.
It’s also likely that if your offer extension is refused or not accepted quickly, your lender won’t honour the original interest rates, which is not an issue when they’re going down, but if they are increasing this can leave you in a difficult situation.
Furthermore, there may also be a requirement for you to go through the same checks you did when you first applied, and this will mean having your income, outgoings and credit history checked again, all of which will take additional time.
To help avoid any uncertainty with your mortgage offer expiring before completion, using the services of a mortgage broker will come in useful, as they’ll be able to offer you extra peace of mind during the process and ensure you’re kept up to date at all times.
