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Mortgage application offer signing?

NI_Sense
NI_Sense Posts: 63 Forumite
Third Anniversary 10 Posts
edited 20 February 2021 at 2:17PM in House buying, renting & selling
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.

Comments

  • AdrianC
    AdrianC Posts: 42,189 Forumite
    Eighth Anniversary 10,000 Posts Name Dropper
    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fully lined up before exchange, else you run the risk of committing to the purchase, then finding out the offer's been withdrawn and you can't complete.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
    NI_Sense Posts: 63 Forumite
    Third Anniversary 10 Posts
    edited 20 February 2021 at 2:23PM
    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fully lined up before exchange, else you run the risk of committing to the purchase, then finding out the offer's been withdrawn and you can't complete.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
    csgohan4 Posts: 10,600 Forumite
    Ninth Anniversary 10,000 Posts Name Dropper Photogenic
    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
    "It is prudent when shopping for something important, not to limit yourself to Pound land/Estate Agents"

    G_M/ Bowlhead99 RIP
  • 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
    Irishpearce26 Posts: 885 Forumite
    500 Posts Name Dropper
    edited 20 February 2021 at 2:59PM
    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.
  • 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
  • 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
    davidmcn Posts: 23,596 Forumite
    Part of the Furniture 10,000 Posts Name Dropper
    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. 
  • 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.
  • 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.

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