Mortgage application offer signing?

NI_Sense

Hi.

Appreciate some advice on this. Situation is Ive just had an offer accepted on my house and have had a further offer accepted on another - so buying and selling at the same time. I have submitted a mortgage application and hopefully will get a mortgage offer. Questions is  - should I sign the mortgage offer before or after exchange of contracts? I guess I'm worried if I am legally obliged to take out the mortgage before exchange of contracts -  just in case my house purchase falls through before then

I live in N. Ireland, so same rules as England and Wales apply.

Help is appreciated.

AdrianC

You have to have the mortgage all fully lined up before exchange, else you run the risk of committing to the purchase, then finding out the offer's been withdrawn and you can't complete.

The worst that'll happen is that your solicitor draws the money down, everything falls apart, and he sends it back - but you have a few days interest to pay.

NI_Sense

AdrianC said:

You have to have the mortgage all fully lined up before exchange, else you run the risk of committing to the purchase, then finding out the offer's been withdrawn and you can't complete.

The worst that'll happen is that your solicitor draws the money down, everything falls apart, and he sends it back - but you have a few days interest to pay.

Thanks. So sign offer before exchange then? I take it Im only legally obliged to the mortgage after exchange?

csgohan4

mortgage and house  are completely different entities OP

If you exchange you are legally obliged to buy the house or incur significant costs

You have a mortgage offer, the lender will offer that amount on completion, but you can pull out at any time minus costs of any admin cost as per your application T+Cs as well as other costs such as survey's e.t.c

NI_Sense

Still unclear about this. Signing a mortgage offer before exchange of contracts does not legally bind you to take out that mortgage before exchange of contracts takes place then? Only after?

Irishpearce26

You would have signed the mortgage application at the time you applied, your mortgage offer gives you an illustration of what the lender has agreed to loan you (you don't sign an offer). Its legally binding when you complete the sale i.e. when your solicitor draws down the funds which would be your moving in day or when you get the keys. When you exchange you are committing to the sale and paying your deposit and its unlikely you would change lender at this stage.

NI_Sense

Irishpearce26 said:

You would have signed the mortgage application at the time you applied, your mortgage offer gives you an illustration of what the lender has agreed to loan you (you don't sign an offer). Its legally binding when you complete the sale i.e. when your solicitor draws down the funds which would be your moving in day or when you get the keys. When you exchange you are committing to the sale and paying your deposit and its unlikely you would change lender at this stage.

Hi. Every bank I look at seems to say that I have to sign the offer once I accept it

Irishpearce26

You'll sign an application form when you make the application for the mortgage, im with virgin and there is no signature needed because I have applied for the loan. If in doubt just ask your lender.

davidmcn

OP, it wouldn't make any sense for you to be legally obliged to the lender to proceed with the mortgage unless you are buying the property - as they're not going to lend you the money without the security over the house, which you can't give them unless you buy it! You're worrying about something which doesn't happen. 

greatcrested

You must have a signed firm ofer before you Exchange.

If you don't what would you do if you Exchanged and the mortgage was withdrawn? Ooops!

Otherway round, what will you do if you have a signed firm mortgage and Exchange does not happen? Nothing! You simply don't draw down the mortage money, or if already drawn down, you return it. Mortgage ended.

Sorted.

NI_Sense

greatcrested said:

You must have a signed firm ofer before you Exchange.

If you don't what would you do if you Exchanged and the mortgage was withdrawn? Ooops!

Otherway round, what will you do if you have a signed firm mortgage and Exchange does not happen? Nothing! You simply don't draw down the mortage money, or if already drawn down, you return it. Mortgage ended.

Sorted.

That makes perfect sense. Many thanks.