Getting a mortgage offer is exciting, but the house-buying process isn't over yet.
Getting a mortgage offer is a significant step towards buying a house, but it's not the end of the process. It's essential to note that mortgage offers have an expiry date, and you need to keep that in mind.
A mortgage offer is a snapshot of your financial situation at the time of your application. It considers your earnings, credit history, interest rates and the housing market's current state. Since these factors can change, a mortgage offer has an expiry date.
You might be wondering how long an agreement in principle and a mortgage offer lasts, whether the duration varies between lenders, and what happens if the offer does expire?
What is an Agreement In Principle?
After providing the necessary information and successfully passing the credit check, the mortgage lender will issue you an Agreement In Principle (AIP), which can also be referred to as a Mortgage In Principle or a Decision In Principle. CAPS
The AIP is a written statement from the mortgage lender indicating the amount they might lend you to purchase a property. Please note that it is not a formal mortgage offer, but having one can make estate agents and sellers view you as a serious buyer. In fact, you usually need an AIP before you can make an offer on a property.
It is worth mentioning that you are not obligated to apply for a mortgage from the same lender who provided you with the AIP; it can simply act as a gateway to the next stage.
How long is an Agreement In Principle valid?
When you receive an agreement in principle (AIP), it will be valid for 30 to 90 days from the date of issue.
It is important to note that an AIP is not a guarantee that you will be offered a mortgage. An AIP only serves as an indicator of what you could potentially borrow, and its terms will be finalised once you have applied for a mortgage with your recommended lender. To apply for a mortgage, you must have an offer accepted on a property.
How long does a mortgage offer take to come through?
Once you’ve accepted an Agreement In Principle, it can take 2 to 6 weeks to receive a mortgage offer after submitting a complete application.
During this time, the lender will conduct thorough underwriting checks to assess your financial situation and credit history, which may require additional information from you. We will talk you through this and ensure we have all the required documents.
The mortgage offer
Receiving a mortgage offer means that a specific lender has agreed to lend you a certain amount of money, at a particular interest rate, and for a specified term. While there are still some tasks to complete before finalising the deal, this is a major achievement on your path to becoming a homeowner.
Once you’ve received the offer, you have an official ‘period of reflection’, usually around 7 days, to consider the terms and decide whether to accept. You can still cancel at this stage, but you might incur a fee.
How long does a mortgage offer last?
Typically, mortgage offers are valid for 6 months from the date they’re issued. The length of time can vary from lender to lender.
After accepting the offer, there is a deadline to complete the purchase. This is usually enough time to exchange contracts and finalise the transaction.
What if your mortgage offer expires?
Depending on your lender and the reason for the delay, you may be eligible for a mortgage offer extension, although additional fees may apply.
An extension usually provides an extra month to finalise the purchase of your new property. If the lender isn’t willing to offer you an extension, or you’ve left it too late to notify them of the delay, you might need to re-apply for your mortgage. Your case manager will talk you through the steps.
Your home may be repossessed if you do not keep up repayments on your mortgage
The information contained within was correct at the time of publication but is subject to change.
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