Buying a new property can be a complex lengthy process with multiple stages, especially when it involves mortgage lenders and mortgage funds. Some of the common questions we are often asked by prospective mortgage applicants at When the Bank Says No involve the process and include: “how long does it take to release mortgage funds?” and “is there a way to speed up the process?”
In this guide, we’ll answer all these questions and walk you through the final stages of mortgage funding all the way to the day of completion. Let’s dive in!
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When Are Funds Released By Mortgage Lenders?
Ideally, you should expect the mortgage fund to be released and reach your solicitor’s account within 3 to 7 days after submitting the request.
By that time, the funds are ready during the exchange of contracts to reach the seller’s account and complete the purchase. Let’s explain all that in further detail.
A Brief Overview of the Process of Releasing Mortgage Funds
The mortgage lender usually releases the mortgage funds to the solicitor’s account to complete the purchase during the “exchange of contracts” phase.This is the phase where the solicitors of both the buyer and the seller begin the official transfer of the property deed in exchange for the transaction of its agreed value. In other words, before lenders transfer the mortgage fund, you need to submit an offer to buy a property, assess its value, and reach an agreement with the vendor.
The mortgage fund is transferred to the buyer’s solicitor account. As soon as the fund is cleared, your solicitor can deposit it into the vendor’s account (or their legal representative).
Different Lenders Have Their Fund Release Timeframe
The exact time at which a lender releases a mortgage fund can be slightly longer or shorter than that depending on a few factors that vary from one lender to another.
For example, according to Barclays’ official website, it takes around 5 days to process and release mortgage funds. Santander also releases its funds a bit earlier at around 3 days, which is one of the shortest time frames in the UK. Other lenders like Halifax release the funds after the exchange of contracts, so it takes the lender an average of 8 to 12 days. On the other hand, some lenders like HSBC may take as long as 2 weeks to release mortgage funds.
Keep in mind that all these time frames are in working days, so the funds may take longer to be actually released if the period includes weekends.
Why Do Mortgage Funds Take Several Days to Be Released?
Preparing yourself for these standard checks can help you keep the mortgage fund release timeframe to a minimum, so let’s have a quick look at them:
Anti-Money Laundering Checks
The first and most common reason why no lenders can release funds immediately and earn the industry advantage is that all financial institutions in the UK need to comply with the regulations of the Financial Conduct Authority (FCA) and the anti-money laundering regulations.
This set of laws was introduced in 2017 to prevent the use of financial services to launder money by criminals.
According to this law, the mortgage lender has to check many aspects of the potential property owner, such as:
- Proof of identity (passports, driving licence etc)
- Source of income (including payslips, bank account statements)
- Address (usually checked against electoral roll information)
Since this process is standardised across all financial institutions, it usually takes as little as 24 hours to complete as long as you provide all the required documents and information on time.
Incorrect information can extend this step to several weeks, so you must ensure that all information provided is accurate as well.
Standard Financial Assessment
Lenders will also carry out a thorough check to make sure that you’re financially capable of repaying the mortgage.This includes various aspects like credit checks, problems with previous liabilities/loans, income and major spending, tax returns, bank statements, etc. This process typically varies from one lender to another, so it can take anywhere from a couple of days to a few weeks.
Processing Time and Mortgage Lender Policy
After passing the previous checks, the lender can issue the official mortgage offer and legally binding documents for the terms and conditions of the mortgage. Negotiating these terms with the lender may also extend the time before the funds are released.
It’s also during that phase that the lender arranges a valuation of the property you want to buy, which may take around 1 to 3 days for the process to be completed. As previously established, every lender may vary here depending on its financial policy and the speed at which documents are processed.
Complications and Paperwork Issues
Lastly, if any complications arise through any of the previous phases, you should expect the mortgage funds to take longer before they’re released into the solicitor’s account. For that reason, you must check all the necessary documents/paperwork and deal with a trustworthy mortgage broker to avoid any bumps along the road.
Can a Mortgage Fund Be Released Before the Exchange of Contracts?
As previously established, the mortgage funds are usually released during the “exchange of contracts” phase, so it’s quite uncommon for lenders to release the funds before that date. With that being said, if there’s a unique situation where the funds need to be cleared before the exchange date, the solicitor can discuss that with the mortgage lender.
If the reason for the early release date is acceptable and supported by the required documents, the lender may release the mortgage funds early.However, there are some cases where the lender may not be able to release the funds earlier, so it highly depends on the circ*mstances of each individual situation.
Is There a Way to Speed Up the Fund Release?
There’s a slight difference between requesting the funds earlier than the exchange date and speeding up the fund release.While you might be able to reach an agreement with the lender to release the fund prior to the exchange date, speeding up the fund release is not something lenders could do.
This is because all lenders are obligated to perform a complete check of the buyer’s financial background to assess their ability to repay the mortgage and ensure that no money laundering schemes are intended. These money laundering checks and additional steps are mandatory and take quite some time, so a lender can only grant you the funds earlier if all these processes are completed.
Yet, you can still speed up the purchase process by having all the documents checked and submitted in time to avoid any unexpected problems, such as the paperwork regarding your source of income. Also, make sure that you keep any additional fees in mind, such as any outstanding solicitor fees payable or stamp duty fees.
How Long Can a Solicitor Hold Mortgage Funds?
The solicitor is responsible for holding the mortgage funds until the purchase is finalised. However, the amount of time that the solicitor will take to release mortgage funds depends mainly on the lender’s policy as well as the terms and conditions of the agreement. If the mortgage funds are not used during that set period, they must be returned to the mortgage provider.
What Happens on the Day of Completion?
The day of completion is the final day for completing the transaction and exchanging contracts between the conveyancing solicitors of both the buyer and the seller. It’s also the day when the buyer’s solicitors will bank transfer the mortgage funds needed to the seller’s solicitor account.
Once the transaction is received and cleared on the seller’s end, the two solicitors exchange a transfer deed contract along with any final proceedings necessary to deem the purchase and transaction complete.
Does The Buyer Have to Be Present on the Completion Date?
As a buyer, since you have a legal solicitor authorised to complete the purchase process on your behalf, you don’t have to be physically present on the day of completion. However, remaining easy to contact on the day is necessary to clear up any unexpected hiccups that could otherwise extend the process and cause unnecessary delays, especially if the timing of the purchase is especially crucial.
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Mortgage Funds Process FAQs
Can mortgage funds be released on the same day?
Technically speaking, a lender is allowed to release the mortgage funds on the same day as long as all the necessary paperwork and documents are provided and fully checked. However, due to legal obligations and the necessary background checking process that financial institutions need to carry out before releasing funds, releasing mortgage funds on the same day is practically impossible.
With that being said, many lenders have a relatively quick document-checking mortgage process that allows them to release mortgage funds in as little as 3 to 7 days.
Can a mortgage be denied after pre-approval?
Getting pre-approval on a mortgage means that, as things stand, the financial institution lending the funds is satisfied with the paperwork provided and the details of the mortgage.
However, a pre-approval is not an automatic guarantee that you’ll be granted mortgage financing once you proceed with the property purchase. During that phase, the lender may still deny the mortgage for a variety of reasons, such as changing critical updates in your financial situation. This includes a change of employment, applying for new loans, appraisal issues, changes in lender’s mortgage regulations, etc.
When do buyers get the keys?
Ideally, buyers are allowed to obtain the keys for their new property after registering the deed, as they would then become the legal owner of the property. The process of registering the deed is usually carried out on the closing day after completing the transaction and exchange of contracts.
The processing of the deed in the registry usually takes around a couple of hours. However, if the registry was closed for the day, you technically need to wait for it before you’re legally entitled to obtain the keys.
Releasing Mortgage Funds Summary
While the process and timeframe for releasing mortgage funds, plus what happens on the completion date can vary, it’s typical for the funds to take around 3 to 7 days to be released, especially if all paperwork necessary is ready and filed.
If you need professional services and mortgage advice regarding mortgage funds, you should consider getting in touch with our team of experts to help you with all your inquiries and make the whole process more streamlined.