What is a mortgage offer?
A mortgage offer, otherwise known as the “offer of advance” is the formal document issued by the lender to the borrower to confirm that they are happy to lend the agreed amount. So, what is a mortgage offer? Well, it is a binding contract between the borrower and a mortgage lender. This confirmation that the lender will provide you with a mortgage comes after the lender has fully assessed your circumstances and a full application is made alongside a valuation of the property. Typically that means that:
- you as a borrower have the appropriate income level, and are able and capable of making the agreed contractual mortgage repayments
- your financial conduct history is acceptable and within their lending parameters
- that the property you wish to purchase (or remortgage) is adequate security for the loan
The mortgage offer will generally contain details such as your personal information (name, address, date of birth), the property information (address, property type, valuation, rebuild value) and the conditions of the mortgage such as interest rate, term, repayment amounts, repayment type, ability to overpay, mortgage fees payable and any early settlement charge amounts if applicable. It will also contain certain clauses stating their rights over the property should you be unable to repay the mortgage i.e. repossession and sale. The amount of time it takes to get to the offer stage depends on the overall complexity of the application. In general, it will take between 18-40 days for the processing of the mortgage application and an offer to be produced.
How long does a mortgage offer last?
Mortgage offers can last between 3-6 months, but this will vary from lender to lender. Some will be valid starting from the date of application whilst others start from the date the mortgage offer was created. Also, some lenders’ mortgage offers will be valid for three from the date the offer was first made. It is worth bearing this in mind before applying.