Published 6 June 2022 · Last reviewed 27 November 2022 · Older article — see current rates
Amend the Mortgage Offer – Extension Affordabilty New Criteria
Extension Requests
A Mortgage Offer is a legal document showing a Mortgage Lender’s intent to lend. It can
in theory be withdrawn at any point up until Completion (funds release) but if funding
conditions remain normal the money should be lent providing the conditions are met.
“Common conditions”
in the Mortgage Offer include insuring the building and the sale of another property. There could also be “special conditions” which are more centred on your case in particular such as “the repayment of personal debt or buying another property simultaneously with the proceeds”.
All of these “Offer conditions” will need to be worked through with your Solicitor.
There will also be a deadline for Completion and it’s about this timeframe that this
series of frequently asked questions relate.
Frequently Asked Questions about Mortgage Offers.
A) The expiry date of the Mortgage Offer will be clearly stated on the Offer document
itself. As a general rule Mortgage Offers last between three to six months from the date
the Offer is issued, however, some Mortgage Lenders start this timeframe from the
application or valuation date. Mortgage Offers for “new build” property might have a
longer end date to allow for spillage in the build time.
A) You will need to discuss your individual needs with your Mortgage Broker and Solicitor,
talk to the Seller about potential delays in the chain etc. and look to time your mortgage
application accordingly
There could be a number of considerations, for example:
• The property you intend to buy might be going through probate which will
take months to be agreed upon.
• You might want to wait until the expiry of an early repayment charge on your
current mortgage before switching.
• You could want to coincide the move with a job relocation or the beginning of the term
time etc.
• In the case of a “new build,” the property is still under construction.
• The last is almost endless
A) The acquisition and setting up of a mortgage requires resources so they do NOT want
to regularly repeat the exercise. The time limit takes into account business levers which
pull in different directions and ultimately amount result in a “compromise” as to what
they believe to be the appropriate length and serve their business interests best.
In determining the Mortgage Offer length the process would consider:
• Cost of funding at the anticipated point of completion.
• Concerns over the economy or political instability and the potential impact on
interest rates and inflation.
• Affordability calculation lag in the relation to the feed from the latest Office of
National Statistics Data (ONS data) in times of the national and regional high costs of
living rises.
• A consistent policy so that Mortgage Brokers know what to expect and can help
guide customers.
• Reference the Mortgage Offer length of competitors.
• Appetite to attract new business at a given time.
• Protect service standards.
• Manage holiday periods and pandemic concerns.
• Manage the end of specific housing schemes such as Help to Buy that have their
own deadlines to meet.
• Then at a micro level manage the risks within “specific cases” that might occur over the
Mortgage Offer duration:
• Property Prices. These change over time and generally up so where’s the
concern here? Well there might be major changes in the area such as a car factory
closure affecting the local economy and jobs; the mothballing of a planned new
shopping centre or annual tourist event; the relocation of flight destinations from
the local airport; the granting of planning permission to build a high rise block
next to your property; or the noticeable increase in crime in the area.
The Mortgage Lender might have changed their panel surveyors due to
unsatisfactory work or distanced themselves from certain geographic areas or
property types. It could be they have been lent too much on a certain
development or have concerns over the value of the stock there.
• Affordability model changes. The Mortgage Lenders tend to review their
affordability models a couple of times a year (and more in high inflation
conditions) this could particular harm certain demographics say families with a
high number of children. The Mortgage Offer deadline allows them to manage out
changes to the policy.
• Policy changes / risk appetite. The Mortgage Lenders could for instance limit
Self Employment mortgages to say 75% to the purchase price for a period to
reduce their exposure to the sector or withdraw from 95% lending etc. Again, the
Mortgage Offer deadline allows them to manage the change in philosophy.
Income assessment. Underwriting is carried out during in the application
process based on past, current and future prediction of earnings. There are also
weightings given to the various components of income. It is a snapshot taken at
one moment in time and the Underwriter might end up with a different conclusion
say six months down the line when a greater track record is demonstrated and
perhaps a different set of income rules are applied.
during the Mortgage Offer period?
A) Yes, significant changes need to be divulged to The Mortgage Lender. The Mortgage
Lender will want to be sure they are lending “responsibility” and not “recklessly” as
ultimately this is to ensure you do not end up in financial difficulty. The start point would
be to discuss the change with your Mortgage Adviser to determine whether it a “material
change” to your circumstances.
A) Any base level fact that changes the terms of the Mortgage contract or can affect your
ability to pay it.
For example:
• Major income changes such as Job lost, demotion, annual bonus to stop, state
benefits withdrawn etc.
• Expecting a new financial dependent i.e. unexpected pregnancy or elderly
parent moving in to be looked after.
• New credit commitment taken out or no longer planning to clear a debt.
• Looking to apply in your sole name rather than a joint application or changing
your name.
• Changes to purchase price, mortgage amount, repayment type or term.
• Changing the property address, configuration or usage.
Q) What are the potential outcomes of an Offer Extension request?
A) Mortgage Lenders take different approaches, and you should be guided by your
Mortgage Adviser and Solicitor but here is a list of potential outcomes. As you can see
they can be far reaching so a Mortgage Offer extension request should really be the last
resort.
• New credit search. This would reveal any new credit taken and recent credit
conduct. Any changes would trigger a new underwriting assessment.
• New affordability calculation. The current steady rise high costs of living has
seen some of our mortgage applicants see amount they can borrow fall by tens of
thousands of pounds.
• Additional documents needed to bring your file up-to-date.
• Fresh valuation. The property might be appraised at the same value and will
alert the seller of potential difficulties with your mortgage.
• Product change.A particular problem in a market where rates are rising.
• Policy change.The Mortgage Lender might not lend to customers with your
profile anymore.
• Insist on a new application. Re-submission of an up-dated form and full set of
documents and references. Notes from the previous application should be carried
across.
• Re-assessment / Straight decline.
• Re-issue a new Mortgage Offer but at a different length.
A) Some Mortgage Lenders will accept the request from Mortgage Brokers but the vast
majority want this news delivered by your Solicitor.
The reason is they want to make sure the request is absolutely necessary and only the
Solicitors who are working through the legal process and are in touch with the Sellers will
know this for sure.
Mortgage Lenders exist to make money on lending however Mortgage Offer Extension
Requests eat into their profits as additional work needs to be completed. This can also
throw up unwanted information which the Mortgage Lenders cannot ignore and have to
act on adding to the administrative burden and potentially the need to tell applicants
they can no longer lend – so you can see why they would want to avoid Mortgage Offer
Extension Requests unless absolutely necessary.
A) This is subjective but in my opinion at least two weeks before the current Mortgage
The offer expires to allow the Mortgage Lender time to assess, and request any new
requirements, and communicate the outcome
• The new expected completion date.
• Reason for why the request is needed e.g. wait on a local authority search.
• The milestone the Solicitor is up to e.g. exchange of contracts, certificate of title
in etc.
A) Normally the Solicitor or sometimes the Mortgage Broker by email. It is sensible to
make a call to them after the request has been submitted.
They in turn will forward to their respective contacts in the bank.