I’m Buying A Property. What Does My Mortgage Offer Tell Me?
Posted on 1st June 2020
The point at which you receive your formal Mortgage Offer, from your lender, is an important part of the conveyancing process. The Mortgage Offer is your lender’s confirmation that they are agreeable to lending the required funds to you, subject to the terms outlined therein. As it says on the tin, this is the lender’s Offer of loan to you.
This is of significance as, it confirms that the lender is agreeable to lending the funds, and the financing of the property is somewhat secured. This is not to say that the funds are guaranteed, which is where the work of your conveyancing solicitor comes in. With a duty to both you, as the prospective purchaser, but also to your mortgage lender, your conveyancer is required to carry out all necessary due diligence, inclusive of searches and raising enquiries, to ensure the integrity of the property, and that there is good and marketable title. Your conveyancer is required to confirm this, upon submission of the Certificate of Title, when requesting the drawing down of the mortgage advance, in anticipation of Completion.
Where issues are revealed, as part of the due diligence process, your Preston solicitors are required to report the same to the lender, with your consent, for their consideration. Not all matters are required to be reported to your lender, however, where the same pose a risk in respect of the property having good and marketable title, particularly in respect of its value, the lender requires notification. Guidance on what your conveyancer is, and is not, to report to your lender can be found via the Council of Mortgage Lenders Handbook, here.
In our blog, last week, we discussed the Council of Mortgage Lenders Handbook in detail. If you missed out, read our blog here, for all things CML Handbook related.
There are, in addition, certain circumstances in which your Mortgage Offer may be withdrawn, by the lender. See our Preston solicitors’ blog, in which we discuss the situations which Offers can be withdrawn, here.
So, what does the Mortgage Offer tell you?
The Mortgage Offer can, in some cases, be a lengthy document and it can, often, be hard to know where to start in trying to understand the same. So, our Preston solicitors are on hand to assist you.
Upon receipt of our solicitors’ copy of the loan, we review the same, in detail, and report to you on the various matters discussed therein. Within our report to you, we will confirm the important sections that you should be aware of. This is also an opportunity for our Preston solicitors to determine whether there are any special conditions attached to the Offer. For example, lenders can impose certain conditions that, essentially, stipulate that the Offer is only made on the basis that certain conditions are met. Such conditions can vary, lender to lender, and can be unique to the property in question. For example, a lender may only agree to lending of the funds on the basis that damp proofing works are carried out prior to Completion, and they are supplied with evidence to such effect. This brings us back to the fact of the property having good and marketable title.
The main concern of your mortgage lender is that their security over the property is going to be adequately protected, and they need to be satisfied of this, before they release funds.
You should, of course, ensure you have thoroughly read through the Offer yourself, and understand the contents. We would, additionally, always advise taking the advice of your mortgage broker in this regard.
The Offer itself
The Offer outlines the main features of the loan, and includes the following, as a handful of examples:
- Your personal details, including full names and addresses, which you should ensure are correct.
- The property details, inclusive of the full address and purchase price which, again, you should ensure is accurate.
- The loan amount being offered.
- How long the Offer is valid for, with a set expiry date.
- The mortgage term, over which the agreement is to be spread.
- The basis of payment, such as repayment or interest only. See our blog for the differences between the two, here.
- The monthly instalments that are to be repaid, and what the same are to comprise of.
- The interest rate at which the mortgage is to be subject to, and whether this is to be fixed, or variable.
- Any early repayment charges that may apply to the loan.
- Any mortgage cash back feature that may be in place and due upon Completion.
- The individual ‘terms and conditions’ of the lender. This is, usually, accompanied by a general information sheet about your mortgage.
As you can see, the Mortgage Offer covers a wide range of information pertaining to your mortgage and our property conveyancing solicitors are here to discuss the implications, of taking out the mortgage, to you.
How do I accept the Offer?
Your Preston solicitor will be able to advise you of your lender’s individual requirements in this regard. Some lenders require written confirmation, that you are happy with the offer and wish to proceed., whereas some lenders do not.
For many, your execution of the Mortgage Deed is sufficient. Your conveyancing solicitor will ask that, once you have fully understood the Offer, and are happy to proceed, you sign the Mortgage Deed as confirmation of this. This is because, the Mortgage Deed, once signed, creates a legally binding document, upon Completion. If there are any discrepancies, or doubt in this regard, the same should not, therefore, be signed.
See our blog on how to sign the Mortgage Deed correctly, and how, in some cases, such Deeds are now being signed electronically, here.
So, if you have any mortgage queries, or any other conveyancing queries, get in touch with our team of expert property solicitors today, at firstname.lastname@example.org, where our local solicitors would be delighted to assist.
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