How long does a mortgage offer last when buying a new home?
“How long does a mortgage offer last?”
“What paperwork do I need to be able to apply for a mortgage?”
“How long does it take to apply for a mortgage?”
These are just some of the questions people ask when they’re thinking about buying a property.
With the average person buying less than a handful of properties in their lifetime, mortgages are a confusing and intimidating topic for many people. Our quick and simple guide will tell you everything you need to know about applying for a mortgage.
In this guide
- How do I apply for a mortgage?
- What documents do I need when applying for a mortgage?
- Mortgage agreed in principle – what is it?
- Whats checks with the mortgage company make before granting my offer?
- How long does it take to get a mortgage offer?
- How long does a mortgage offer last?
- What happens after mortgage offer is issued?
- How long from mortgage offer to completion?
- What if my mortgage offer expires before completion – can you extend a mortgage offer?
- Mortgage offer extension refused – what now?
- Key takeaways:
How do I apply for a mortgage?
There are two ways you can apply for a mortgage. You can either apply directly to a mortgage lender or go via a mortgage broker.
Finding a mortgage through a mortgage broker
Mortgage brokers have the advantage of being able to access a wider array of mortgage products. This means you may be able to find a cheaper mortgage, or one that is particularly suited to your circumstances and therefore that you’re more likely to be accepted for. For example, it can be more difficult to secure a mortgage if you’re self-employed or if you want to mortgage an older or less conventional property. A mortgage broker is likely to be knowledgeable about which mortgage lenders are most likely to be happy to lend in such circumstances, and will be able to help you get the best deal.
Applying directly to a mortgage lender
There are two circumstances in which it might be beneficial to apply directly to a mortgage lender.
You already have a mortgage and are looking for a new fixed deal
In this situation, applying directly to your existing mortgage could make your application quicker and easier. Unless you’re planning to borrow additional funds, securing a new fixed rate with your existing lender should be very straightforward. You shouldn’t need to provide any of the paperwork (payslips, bank statements etc) usually required for a mortgage application, and a new deal can often be arranged with just one phone call.
You have a current account with the mortgage lender
If you have your mortgage and current account or savings account with the same provider, you may be eligible for a preferential rate or other perks. You may also be able to apply for an ‘offset’ mortgage, where any savings you have can be used to reduce the amount of interest you’re required to pay.
If you’re considering applying directly to a mortgage lender, it’s worth researching alternative deals through a mortgage broker first. This way you will know whether the mortgage product you’re being offered by the lender is comparable.
What documents do I need when applying for a mortgage?
There are several documents you will need to supply when applying for a mortgage. These will include:
- 3 most recent payslips (covering a minimum of 3 months)
- 3 most recent bank statements
- Proof of identity – a current driving licence (with photo) or passport is preferable
- Self-employed applicants will need to provide a self-assessment tax return (SA302) and tax year overview, along with an accountant’s certificate
- If you receive any child benefit or tax credits, you will need to provide a letter from HMRC detailing your entitlement
- Receive a private pension of annuity? You’ll need a pension payslip to evidence how much you receive
Mortgage agreed in principle – what is this?
Before you make an offer on a property, it’s important to have an idea of how much you might be able to borrow from a mortgage lender. The first step in doing this is getting a mortgage offer in principle (also known as an Agreement in Principle).
Before giving an Agreement in Principle, a mortgage lender will ask you some basic questions about your income and financial commitments. Based on these answers, they will decide whether they’d be likely to approve you for a mortgage and, if so, how much they’re likely to be happy to lend you. This information will be formalised in an Agreement in Principle.
What checks will the mortgage company make before granting my offer?
Once your formal mortgage application has been submitted, it will go through several checks as part of the underwriting process. These checks will explore different aspects of your application to decide how high-risk your application is. These will include:
The mortgage lender will check whether your application meets their simple top-level lending criteria. These will look at things like your age, employment status, residential status and minimum basic income.
The lender will use a third-party credit check agency (eg. Experian) to get an overview of your financial profile and behaviour.
The lender’s underwriters will look at how affordable the mortgage would be for you. They will take into account your income (mortgage companies will usually be happy to lend you between 4 and 5.5 times your salary), your debt-to-income ratio and your typical monthly outgoings. This information will form part of your formal mortgage application.
Part of the underwriting process will involve looking at how risky the property is to lend on, for example flats above commercial premises, those with a short lease and properties of non-standard construction are all considered higher risk. As part of these checks, your mortgage lender will carry out a property valuation. You can choose to upgrade this to a full property survey if you wish to.
Fraud and money laundering checks
Lenders will also need to check that the property purchase would not form part of any fraudulent or money laundering activity. They will do this by ensuring the deposit money comes from a legitimate source.
Simple mortgage applications may be put through automated underwriting, using an algorithm to decide how high-risk your application is. Other, more complex cases will require manual underwriting, which means a person will take responsibility for your application and look into its merits. Being referred for manual underwriting is likely to take a little longer, but it may also improve the chances of your application being successful, as a human underwriter is able to use their personal judgement and discretion.
How long does it take to get a mortgage offer?
It takes an average of 2-6 weeks from mortgage application to mortgage offer.
How long does a mortgage offer last?
Most mortgage offers will last 3-6 months.
If there is a significant change to your financial situation or employment status during the period of time your offer is valid, you have a legal responsibility to inform your lender as it may impact their ability to lend to you.
What happens after mortgage offer is issued?
Once you have your mortgage offer in place, your solicitor can complete the conveyancing process (the legal process of purchasing a property). This will include writing up the relevant contracts and gathering information about the property you are buying.
How long from mortgage offer to completion?
How long the process takes after you receive your mortgage offer will depend on your individual circumstances and how straightforward the purchase is. On average, you can expect your sale to complete around 1-3 months after you receive your mortgage offer.
What if my mortgage offer expires before completion – can you extend a mortgage offer?
If you think your mortgage offer may expire before your sale completes, it’s important that you contact your lender as soon as possible. If nothing about your personal circumstances has changed, you may be able to simply apply for an extension to the offer.
Mortgage offer extension refused – what now?
If you are turned down for a mortgage offer extension, you will need to reapply for the mortgage.
It used to be fairly simple to get a mortgage offer extension, but the recent rises in interest rates and inflation have made things more challenging and more would-be buyers are having their request for a mortgage offer extension refused. Rising interest rates are making mortgages less affordable for people, and those who passed affordability checks with their initial mortgage application may no longer do so.
If the lender turns down your request for a mortgage offer extension, it’s worth exploring your options with a mortgage advisor. Different mortgage lenders have different lending criteria. This means there may be some lenders who are more likely to approve your application than others.
A mortgage offer lasts an average of 3-6 months. If you’re keen to avoid having to apply for an extension to your offer, or reapplying, it’s important that you do everything you can to make your sale as quick and efficient as possible.
There are several steps you can take to ensure your property sale doesn’t get held-up unnecessarily.
Choose your buyer carefully
One key variable, which will have a significant impact on how quickly your sale completes, is your buyer’s circumstances.
An ideal buyer, who will enable the quickest sale, will be:
- A motivated buyer with a strong need to move
- Employed full-time, having been with their current employer for a significant period of time
- Able to provide a large deposit
- In a strong financial position
It’s your estate agent’s job to ensure any potential buyers are thoroughly vetted before you accept their offer.
Keep informed on sale progress
Keeping in regular contact with your estate agent and solicitor will ensure you respond quickly and thoroughly to any enquiries. It will also mean you are made aware of any issues that have the potential to hold up your sale.
Explore alternative options if the sale of your current property is holding up your move
If you become concerned that time is running out, it’s worth exploring your options. Speak to your mortgage advisor about the likelihood of being accepted for a mortgage offer extension. If that looks unlikely, and you’re concerned about having to reapply for a mortgage, you may wish to explore quick sale options. A quick sale company will buy your property at a discount, so it won’t be the right option for everyone, but they can complete the sale in as little as a week, which could make the difference between securing your onward move or having the purchase of your new home fall through.
Find out more about:
- How does equity release work?
- How much do conveyancing fees cost?
- Selling a house with tenants
- Selling a buy-to-let property in 2023
- What is a buy-to-let mortgage?
- Landlord tax explained
- When’s the best time to sell a house?
- What is a down valuation?
- How to sell a house without an estate agent
- What to do if your house sale falls through