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 concern this process and include: “how long does it take for mortgage funds to be released?” and “is there a way to speed up the process?”
In this guide, we’ll answer all your questions and queries, and walk you through the 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 funds to be released and reach your solicitor’s account within 3 to 7 days after submitting the request. But when does a solicitor request mortgage funds? Typically this occurs after the seller accepts the offer, but this process takes a long time too.
By that time, the funds will be available during the exchange of contracts, ready to reach the seller’s account and complete the property purchase. Let’s take a look at this in more 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 part of the process when the solicitors of both the buyer and the seller begin the official legally binding transfer of the property deed in exchange for its agreed value, crucially when both buyer and seller become legally bound.
Before the exchange of contracts, you’ll have consulted a mortgage advisor, found the best option for you, submitted an offer to buy the property, assessed its value, and reached a verbal agreement with the vendor.
The mortgage fund is transferred to the buyer’s solicitor account between exchanged contracts and the scheduled completion date as you move towards the final stages of the transaction. As soon as the money is cleared, your solicitor can deposit it into the account of the vendor’s legal representative.
Lenders Have Different Fund Release Timeframes
The exact time at which a lender releases a mortgage fund can vary depending on the lenders. Even the High Street lenders vary with their mortgage fund release timeframes. Barclays for example takes around 5 days to process and release mortgage funds. Santander is usually a bit quicker 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. 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 available if the period includes weekends. Other specialist lenders, like those that we have access to, may be able to turn things round for clients far quicker than many of the standard bank and building society lenders.
Why Do Mortgage Funds Take Several Days to Be Released?
There are lots of reasons why it takes several days and these include standard industry checks. Being aware of these 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 lenders can’t release funds immediately is that all financial institutions in the UK need to comply with the Financial Conduct Authority’s anti-money laundering regulations.
These laws were introduced in 2017 to prevent money laundering and the use of financial services by criminals to launder money.
According to these regulations, the mortgage lender has to check many aspects of the prospective property owner who will need to:
- Provide proof of identity (passports, driving licence, etc)
- Supply evidence of source of income (including payslips and bank account statements)
- Address (usually checked against electoral roll information)
Since this process is standardised across all financial institutions, it usually only takes around 24 hours to complete as long as you provide all the required documents and information on time.
Incorrect information can extend this period to days or weeks, so you must ensure that all the information you supply is accurate and in the right format.
Standard Financial Assessment
Lenders will conduct a thorough check to ensure 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 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 all the financial checks, the lender will issue the official mortgage offer and legally binding documents containing the mortgage terms and conditions. If you need to negotiate with the lender over these, this may also extend the time before the funds are released.
During this time, the lender will also arrange a valuation of the property you want to buy, which usually takes a few days, depending on the individual mortgage provider.
Complications And Paperwork Issues
If there are any complications or delays during the mortgage application process, you should expect the mortgage funds to take longer to be released into the solicitor’s account. For this reason, you must check all the necessary documents/paperwork and deal with a trustworthy and experienced mortgage broker who understands the system and can help you avoid any bumps in 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 unusual for lenders to release the funds before that date simply because, at this stage, there are many reasons between the parties involved as to why a transaction may fail. However, if there’s a unique situation where the funds need to be cleared before the exchange date, your solicitor can discuss that with the mortgage lender.
If you want the funds released earlier and this is supported by the required documentation, the lender may agree to this. However, it’s not a given and something that can be relied on, so it largely depends on the circumstances 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 money a few days before the exchange date, lenders cannot usually speed up the movement of the money.
This is because all lenders are legally obliged to perform a series of checks on the buyer’s financial background to assess their ability to repay the mortgage and ensure that the process complies with anti-money laundering regulations (AMI legislation). These money laundering checks and additional steps are mandatory and can take some time, so a lender can only grant you the funds earlier if all these processes are completed.
To save time and speed up the process, have all the required documents in order, checked, and submitted in time. An experienced mortgage broker can help you with this, and it’ll avoid any unexpected problems and delays. Don’t forget that there may be additional fees, such as outstanding solicitor fees 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 takes to release the funds depends mainly on the lender’s policy and the terms and conditions of the agreement. If the 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 and other capital sums to the seller’s solicitor.
Once the transaction is received and cleared at the seller’s end, the two solicitors exchange a transfer deed along with any final proceedings necessary to complete the purchase, such as issuing the completion statement and paying any stamp duty.
Does The Buyer Have To Be Present On The Completion Date?
As the buyer, your solicitor is legally authorised to complete the purchase process on your behalf, so you don’t have to be physically present on the day of completion. However, remaining easy to contact on the completion date is helpful in managing any last-minute snags that could otherwise extend the process and cause unnecessary delays.
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Mortgage Funds Process FAQs
Can Mortgage Funds Be Released On The Same Day?
Technically speaking, releasing funds on the same day is possible as long as all the necessary paperwork and documents are provided and fully checked. However, due to legal obligations and the required process of background checks, most financial institutions realistically need a few days to do this, meaning releasing mortgage funds on the same day is practically impossible. So how long does it take? The time varies across different lenders, but many 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 buyers. However, pre-approval is not an automatic guarantee that you’ll be granted mortgage financing if you proceed with a property purchase.
Many buyers opt for pre-approval before they start house hunting, and this provides confidence to vendors when they receive their offer. However, the lender may still deny the mortgage for a variety of reasons, such as critical updates in your financial situation. This could include a change of employment, applying for new loans, appraisal issues, changes in lender’s mortgage regulations, etc.
When Do The Buyers Get The Keys?
Ideally, buyers are allowed to obtain the keys for their new property on completion day, once the sale proceeds show as cleared funds in the client account of the vendor’s solicitor.
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 contacting our team of experts. They can help you with all your inquiries and streamline the whole process.