The importance of reviewing your mortgage offer

23rd October 2018

This might not be the most exciting article you’ll ever read – but it’ll be worth it. Securing a mortgage is a big deal and it’s important to make sure you get it right, and that starts with reviewing your mortgage offer before signing the dotted line.

A mortgage offer is a binding contract between you and your lender

By signing it, you’re committing to taking the loan amount on, with the conditions your lender has specified. Once you have reviewed and signed it, it’ll be sent to the solicitors and the legal process will be started i.e. it’s important to review your mortgage offer and make sure that it is correct!

What to check

1. The loan amount

This is, of course, the amount of money they have agreed to lend you. It’s important to review your finances against this amount, to ensure that you can meet the monthly premiums against it.

2. The valuation amount

This is the value of the property and the number tells the lender what amount is safe for them to lend on i.e. how secure their loan to you is.

3. The interest rate payable

This is the interest rate you are agreeing to. This number will account for the additional amount owed on top of the loan amount borrowed.

4. The offer expiry date

All mortgage offers have an expiry date – take note of what yours is as, if you don’t complete before that date, you will need to apply for an extension.

5. Special conditions

There are details that are standardised across all mortgage offers but some are bespoke to you – they are special conditions. An example would be that you ‘you have to make sure you pay off the debt you said you would prior to the completion date.’ Another would be any issues flagged by the valuation report, for example, that you have to fix the fascias and soffits (roof) as a condition of the offer.

6. That you have buildings and contents insurance

It is not a legal requirement to have buildings and contents insurance before taking out a mortgage but it will likely be a requirement from your lender. Often, if you don’t ensure this is in place yourself, the lender will organise it for you and charge you for the pleasure! It’s at the point of the exchange of contracts that you are legally responsible for insuring the property – so make sure it is set up for the exchange date your solicitor gives you.

7. That you can cover the monthly repayments in the worst case scenario

Your monthly mortgage payments will need to made each month, whatever your circumstance, otherwise, you run the risk of the property being repossessed. Whatever the scenario – make sure you are covered for it. If you fall seriously ill and can’t work, could you or your partner make the payments? If you die, could the payments still be met and your family stay under the roof? Securing Critical Illness cover, Income Protection and Life Insurance ensures you don’t have to worry about the worst case scenario. Make sure these are in place for the moment the house is yours.

There you have it. It won’t take long to make sure your mortgage offer is right, and the value of doing so is great. As ever, do get in touch if you have any questions on the above and need someone to talk you through it

All content is accurate at the time of publication

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