I have a mortgage offer so can I move house now?
Claire Gummow, Chartered Legal Executive in Coodes Solicitors’ Residential Property team, says it’s a common misconception that a mortgage offer means you are ready to complete on a property purchase.
Receiving your mortgage offer is a key part of the house buying process. It means your conveyancer can move onto the final steps of your purchase. However, it is a misconception that once your lender has confirmed the mortgage offer you are ready to move. The mortgage funds cannot be transferred until your solicitor has carried out vital checks on behalf of your lender.
Increased mortgage approvals
The majority of first time buyers, and many of those looking for their second or third home, need to take out a mortgage to fund their purchase. According to the English Housing Survey, just under half of the country’s homeowners have a mortgage.
Recent data published by the Bank of England showed that, in November 2020, mortgage approvals for house purchases reached their highest levels since 2007. The introduction of the Stamp Duty Land Tax holiday last summer, to protect the property market against the impact of Covid-19, has led to an increase in people looking to move. In addition, the pandemic has encouraged many to reconsider all aspects of their lives, causing some to relocate.
While securing a mortgage offer gets you a step closer to moving into your new home, it is not the final stage of the process.
What is a mortgage offer?
If you require a mortgage to buy a property, you will need to apply to a bank or building society. You may do this yourself or instruct a mortgage advisor to find you the best deal. Your chosen mortgage lender will then carry out a range of checks on your income and outgoings to work out how much it is willing to lend, based on what you can afford to pay back each month. Your lender will also instruct a surveyor to value the house or flat you want to buy.
A mortgage offer is a lender’s confirmation that your mortgage application has been approved. It indicates that the lender is happy with your financial circumstances and the basic valuation on the property.
A mortgage offer will be valid for a certain period of time before it expires. This varies from lender to lender, but is usually in the region of three to six months.
When will I receive a mortgage offer?
Securing a mortgage offer is one of the last steps in the house buying process.
When you start to look for a new home, you will initially secure a mortgage in principle, which indicates how much your lender is likely to offer you. When you have had an offer accepted on the property you want to buy, your solicitor will carry out the relevant searches. If all proceeds smoothly, you will then need to get a mortgage offer from your lender.
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What happens after I get a mortgage offer?
Securing a mortgage offer is a significant step if you are looking to buy a house. However, it does not mean you can proceed with the purchase right away.
Solicitors not only act for you as the purchaser but also for the mortgage lender. After receiving the mortgage offer, the solicitor will review your mortgage lender’s requirements to check that the property you are purchasing would be acceptable to them. This will include reviewing:
- The title to the property.
- The enquiries the solicitor has raised and the replies received.
- The results of the searches.
- Any conditions that have been attached to your mortgage offer. This could include a structural report, a clear mining survey or checks on access rights, for example.
- The mortgage lender’s individual requirements, which your conveyancer will have to comply with.
If these enquiries raise any concerns, the solicitor will contact the lender, providing them with as much information as possible. The mortgage lender will then have to make a decision as to whether or not they are still happy to proceed with the mortgage offer they have issued.
The length of time it takes to complete the process varies. Lenders have different turnaround times for responding to a solicitor’s correspondence. If the mortgage offer has conditions, such as searches attached to it, this could add more time. However, the process is often completed in a matter of days.
When can the funds be transferred?
Your conveyancer will not be able to request the mortgage funds until all these checks have been carried out. Their request for the mortgage funds provides confirmation to the mortgage lender that the title to the property is satisfactory and meets their requirements.
Getting your mortgage offer is a big step forward. It means you are almost there. However, it is not time to celebrate just yet.