Taking out a mortgage to buy your first home is one of the biggest – if not the biggest – financial decisions you’ll ever make. But it’s also one of the most rewarding. Finally, after saving for so long and renting in the city you love, you get a place to call your own.
Having said that, you have to go through the mortgage process first, which can be really confusing. With jargon and paperwork coming at you left, right and centre, understanding what it all means can be a lot to get your head around.
In this blog, we’re helping you get to the bottom of your most pressing questions about first time buyer mortgages, including offers, withdrawals, extensions and the best lenders.
What is a mortgage offer?
Not to be confused with a mortgage in principle (MIP), also known as an agreement or decision in principle, your mortgage offer is what you’ll receive from the lender after they’ve approved your application.
Your mortgage offer includes details like:
- The amount of money the lender will loan you
- The interest rate (fixed or variable)
- Estimated monthly repayment amount
- The length of time you’ll repay the mortgage
- Any fees due for taking out the mortgage
- Specific conditions attached to the mortgage
- How long the mortgage offer is valid for
You’ll usually receive your mortgage offer two to four weeks after submitting your application. To prevent any delays in the application process, it’s important to make sure all the information on your application is accurate, and you provide the relevant paperwork, including:
- Pay slips
- Bank statements
- Proof of deposit funds
- ID
- Tax forms/accounts (if self-employed)
Reasons why a mortgage offer may be withdrawn
Your lender has the right to withdraw the mortgage offer at any time up to the completion date. There are several reasons this could happen, including:
Mortgage offer expiry
A mortgage offer is valid for a set period – usually up to six months – but this varies depending on the lender. If completion doesn’t take place within the time specified in the offer, the lender may withdraw. But there is a way around this (more on that below), so you won’t necessarily have to reapply.
Credit report changes
Your lender will carry out credit checks as part of the mortgage process. This includes a ‘hard’ search after you submit your application and before you receive an offer.
Afterwards, they may conduct additional checks to make sure your credit hasn’t changed significantly. If it has, due to missed payments or new debts, the lender may decide to withdraw your mortgage offer.
Misleading information
The lender will also conduct due diligence to make sure your property purchase is above board, like checking that there’s no fraud and that your funds are from legitimate sources. This is why it’s so important to be completely honest on your mortgage application; any discrepancies between the information on your application form and the supporting documents could cause the lender to withdraw the offer.
Change of situation
Sometimes, unexpected things happen, and circumstances change. For example, a job redundancy or drastic changes to your monthly outgoings. Depending on the severity of the situation, it could result in changes to the mortgage terms or withdrawal of the offer.
Property issues
Sometimes, further conveyancing checks on the property bring to light issues not originally flagged. For instance, flooding issues or structural damage, which might result in the lender withdrawing the mortgage offer.
Can you get an extension on a mortgage offer?
The process of buying a home can be long-winded and complicated. There will inevitably be bumps in the road, from construction delays (if it’s a new build) to legal hold-ups. Don’t worry, though, because mortgage lenders understand this and, in most cases, are happy to extend a mortgage offer beyond the initial agreed period. The length of the extension will depend on the lender, and they may request proof of bank statements to check your financial circumstances haven’t changed since the original agreement.
We recommend contacting your mortgage advisor or lender directly if you want to discuss an extension of your mortgage offer.
Who are the best mortgage lenders for first time buyers?
The best mortgage lender for you depends entirely on your financial circumstances. In the first instance, it’s always wise to speak to an Independent Financial Advisor (IFA), as they can guide you through every step of the process, from finding a lender to completing your application.
We recommend using Censeo Financial as an IFA when buying with us, as they know exactly which lenders offer mortgages on Pocket homes.
Hopefully, you’ve found this guide to mortgage offer withdrawals and extensions helpful. For more information about stepping onto the property ladder, check out our first time buyer guide, which details the process of buying a Pocket home from start to finish.
If you’re not quite at that stage but still interested in owning your own home, create a My Pocket account to check your eligibility, register for available properties and stay up to date on our latest developments.