If you're buying with the help of a mortgage, you'll hear the term Mortgage Offer throughout your conveyancing transaction.
Many buyers assume that once their mortgage application has been submitted, everything is approved and ready to go. In reality, there's an important difference between applying for a mortgage, receiving an Agreement in Principle and receiving a formal Mortgage Offer.
Understanding what a Mortgage Offer is, and why your conveyancer needs it, will help you understand one of the most important milestones in your purchase.
The Short Answer
A Mortgage Offer is your lender's formal confirmation that they have agreed to lend you the money to purchase your property.
It sets out:
- how much they are willing to lend;
- the conditions of the loan;
- any special requirements;
- and how long the offer remains valid.
Before we can exchange contracts, we must ensure that your Mortgage Offer has been received, reviewed and that any lender requirements have been satisfied.
The Explanation
Buying a property with a mortgage involves more than simply borrowing money.
Before issuing a Mortgage Offer, your lender will usually:
- assess your mortgage application;
- carry out affordability checks;
- arrange a valuation of the property;
- review your financial circumstances;
- confirm that the property is suitable security for the loan.
Once they are satisfied, they'll issue a Mortgage Offer to both you and your conveyancer.
Your conveyancer must then review the offer carefully to ensure:
- your details are correct;
- the property details are correct;
- there are no special conditions that need to be satisfied before completion;
- the legal title meets your lender's requirements.
Only once these checks have been completed can we prepare for Exchange of Contracts and request your mortgage funds for Completion.
Common Questions
Is an Agreement in Principle the same as a Mortgage Offer?
No.
An Agreement in Principle is an initial indication that you may be able to borrow a certain amount. It is not a commitment to lend.
A Mortgage Offer is the lender's formal approval.
Can I exchange contracts before my Mortgage Offer arrives?
Usually not.
Before Exchange of Contracts, we need to ensure your mortgage arrangements are in place and that any lender conditions have been satisfied.
Does my Mortgage Offer expire?
Yes.
Most Mortgage Offers are valid for a fixed period.
If your purchase is delayed, we may need to ask your lender whether the offer can be extended or whether a new application is required.
Will you request the mortgage money?
Yes.
Once we're ready for Completion, we'll request your mortgage advance from your lender so the funds arrive in time for your Completion date.
Top Tip
Read your Mortgage Offer carefully when you receive it.
Although your conveyancer will also review it, it's important that you understand the amount you're borrowing, the repayment terms and any special conditions that apply.
Did You Know?
Your Mortgage Offer isn't just sent to you.
Your lender also sends a copy to your conveyancer so that we can ensure all of the lender's legal requirements are satisfied before Completion.
Common Misconception
"Once my mortgage application has been submitted, everything is approved."
Not quite.
Your application still needs to be assessed before your lender decides whether to issue a formal Mortgage Offer.
The MA Lawyers Approach
At MA Lawyers, we carefully review every Mortgage Offer to ensure that both you and your lender are fully protected.
We'll explain any conditions that require your attention, deal directly with your lender where necessary and make sure everything is in place before requesting your mortgage funds for Completion.
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