A person may have been promised a mortgage offer but that promise means nothing until a mortgage offer is issued. 

At the time of writing, lenders have indicated that they will honour applications already submitted but may delay new applications until they can properly price mortgages. This raises two problems. 

I have 45 years’ experience of the property market and that longevity means that I have seen many crises before. Lenders do a great job, and this situation is not a credit crunch (and hopefully it will not become that) as in the financial crisis. But they need to price “swaps” against the interest rates they offer. If interest rates are volatile, they cannot confidently price mortgages and the easiest action is to withdraw all or part of their products from the market. 

While I am certain that the lenders will do their absolute best, cases at application that are marginal are perhaps more likely to be refused. Lenders, by regulation, must respond to affordability and increased costs will impact affordability. So, cases that do not proceed because they fail at application may increase. 

The second but related difficulty is that even if an application is approved, the timing of whether that case is “in the pipeline” or a “new application” may mean that the pricing is at higher rates. Those rates may make the prospect of the purchase unaffordable for the potential purchaser. 

Everybody craves certainty in an already dysfunctional property market and conveyancing system. The mortgage situation is a curved ball. 

As stated above, the Scottish market is now rather like the English one with chains and delays. If you are involved in a chain, then your transaction may be impacted upon by someone else in the chain being impacted by the chaos in the mortgage industry. So even though both you and the other person involved in the transaction may have their mortgage situation resolved, someone else’s transaction may impact you. 

What the current circumstances do is make less reliable that part of the graphic above noted as “Period Impacted by Mortgage Offers”. In other words, it is generally late in the transaction that these issues will manifest themselves. That amplifies our normal warnings that you should not assume that the transaction is happening until we tell you that a contract can be completed. 

If you make arrangements for removals and the like before you have that information, it is entirely at your own risk. See our MMi Explainers on this subject: 

MMiExplains | Dates of Entry (mmilegal.com) 

Understanding how delays may occur in your transaction (mmilegal.com) 

We will not be charging clients extra for the expenditure of time created by this unwanted uncertainty. However, we will probably look for payments to account in respect of legal costs already intimated to you when you accepted our quotation. That facility already exists within our terms and conditions and is frequently used. 

But I wanted to let you know that requests for earlier payments to account are more likely because we need to use our resources more proactively to ensure that we maximise the opportunity of success for the transaction. In addition, if there are any circumstances where we have highlighted to you, and you have accepted, that additional costs will be involved we will probably ask you to pay those at the time that they are incurred. 

It is difficult not to be aggravated by the actions of others in creating consequences that for many seemed only too easy to foresee. However, we cannot change those actions, but we can respond to the repercussions and look after your interests as best as possible. 

The way in which we can look after your interests best is to adapt our approach to transactions to consider the possibility that they will be impacted by the mortgage chaos. The steps that we take will be governed by the type of transaction and you can see the specific processes under each heading above. 

You can assist us during this period as well. In the graphic showing the nature of the conveyancing transaction, there is little that we can do to change the underlying timing of transactions and maintain the professional requirements demanded of us by others. As explained in much of our material, it is the demands of regulators and lenders which really sets the parameters and environment in which we work. 

There will be circumstances where the availability of mortgage finance at a certain interest rate will drive clients to make decisions that they might not otherwise have made, were it not for that heavy pressure. Where such circumstances arise, we will need to document them because later it may be forgotten that a decision was based upon factors other than the preferable legal environment. 

When times such as these occur, they naturally create anxiety. When anybody is anxious, they want to have information that will reduce their feelings of concern. We will always do our best to provide information but if we have nothing to report then please do not keep phoning because it just takes up resources unnecessarily. Email is always the best communication method and, at times like these, it is always preferable to have an audit trail of communications. 

Lenders have indicated that they will honour applications already submitted. In my general comments, while I know that lenders will do their very best, experience of previous similar occasions are that the definition of “submission” and “pipeline” can often be variable. In addition, the underwriting that lenders carry out will be impacted by their views of affordability which will definitely take into account both the rises in interest rates and the cost of living.

We require to find a balance between carrying out all the work that we would normally do in anticipation of a mortgage offer being made or whether to delay carrying out substantial work until there is both clear evidence that the mortgage offer is forthcoming and that it is in terms which are acceptable to you. 

The period in which offers of loan are issued may be impacted by the current circumstances. In other words, even if there is no concern on the lender’s part with your offer of loan, the time it takes to be issued may be longer because lenders have so much on their plate. 

While the individual details of the client are of course confidential, legal firms need to be transparent with firms acting for a seller as to issues that may lengthen or undermine the transaction. It is likely that most solicitors will seek confirmation of funding being available because in a market where there is a possibility of volatility on house prices, sellers will not wish to “miss the boat”. 

Accordingly, we may face pressure from solicitors acting for sellers to carry out all work in anticipation of the mortgage offer being issued in which case it is more likely that we will be asking for payments to account of costs and outlays. 

Above all, we have absolutely no control, impact or influence over the terms of, or the time period in which the mortgage offer is made. The only people that can assist you in that respect are either your broker or the lender. Both are likely to be under pressure which may make communications slower than you would wish. That will only increase any anxiety. There is no value in contacting us to ascertain whether we have heard anything from your lender because they will always contact you first. 

Remember also that whilst your own arrangements may be fine, other parties who may be in a chain of which you are part, may be impacted. Please have a look at the section called “Problem Circumstances 2” to gain an insight into the circumstances. 

We can only provide you with that information as it is received. In circumstances where there is a chain, one is effectively governed by the weakest link. These are the joys of everyday conveyancing, and they will only be exacerbated where there is pressure on the system. As explained elsewhere, the conveyancing system was not designed for modern circumstances and its ability to perform under greater pressure is extremely limited. We know this from the recent experience of the post-pandemic period, where the dysfunctionality of the system was extremely apparent. 

Remember also that whilst your own arrangements may be straightforward, the party who is buying your house may be impacted. Please have a look at the section called “Problem Circumstances 2” to gain an insight into the circumstances. 

Even though you may feel that you have sold your house until the purchaser has finance issued, their solicitor will not conclude the contract called the missives. 

Our approach to the transaction will, accordingly, be largely governed by both the availability of finance for the purchaser and whether the purchaser is also selling a property. If the purchaser is selling a property, then the wider “chain” may be relevant. 

We can only provide you with that information as it is received. In circumstances where there is a chain, one is effectively governed by the weakest link. These are the joys of everyday conveyancing, and they will only be exacerbated where there is pressure on the system. As explained elsewhere, the conveyancing system was not designed for modern circumstances and its ability to perform under greater pressure is extremely limited. We know this from the recent experience of the post-pandemic period, where the dysfunctionality of the system was extremely apparent. 

From your point of view, our preference is to carry out less of the work until we know whether the purchaser’s finance or general circumstances are known. We incur time and cost irrespective of the outcome of the transaction and we don’t want you to encourage greater costs than necessary. 

If you feel confident in the purchaser and want us to push ahead with the transaction as quickly as possible then we can do so but we will look for a payment to account so that there are not shocks for you at a later point. 

Although solicitors must look after their own clients' affairs and maintain confidentiality, equally there is a need to be transparent with other solicitors as to the general functioning of the transaction. If one party is unable to progress the transaction because of fundamental issues such as the availability of finance, then they really must tell the other solicitor. 

We will be contacting the solicitors acting for the purchaser asking what the position about their client’s finance is so that we can provide you with the up-to-date position. That information will not be available in “real-time” and if we have information, we will let you know. But the purpose of this note is to emphasise all our normal explanations, that until a contract is completed, your property is not sold. In most cases that will be determined by the availability of finance and accordingly the current problems will increase uncertainty, unfortunately. 

Above all, we have absolutely no control, impact or influence over the terms of, or the time period in which the mortgage offer is made to the purchaser. It is very much appreciated that these are anxious times, and we will let you know as soon as we have information. It would be much appreciated if you do not call us seeking the latest position because we will tell you if we have that. In addition, it is very helpful if you could use email rather than phoning. 

Generally speaking, in a remortgage, we will be instructed very adjacent to the issuing of a mortgage offer. Until a mortgage offer is issued we will do no work other than seek some administrative information from you.

Work commences when the mortgage offer is issued. The time taken to complete the remortgage is dependent upon many factors. These include whether you have a early redemption charge, whether you wish to settle before the early redemption charge and any conveyancing that is required alongside the remortgage elements.

Many aspects of the remortgage are dependent upon action by you. It is really important that you respond to all of our communications in the form that we request.

In this environment, the expiry date of the mortgage offer is exceptionally important. Where interest rates are moving upwards, it is vital, if possible, to complete the transaction within the duration of the current mortgage offer.

Normally that is not a problem but where there are issues such as transfers of title or problematic circumstances then in recent times it has often been the case that an extended mortgage offer will be necessary. Those now are circumstances that you will wish to avoid which means that resolving issues becomes ever more important. 

From our point of view, where issues arise that impact the remortgage, the clock effectively stops in terms of the transaction. However, the clock does not stop in terms of the expiry date of the mortgage offer. Accordingly, it is very important that you act immediately upon receiving communications from us

Above all, we have absolutely no control, impact or influence over the terms of, or the time period in which the mortgage offer is made. The only people that can assist you in that respect are either your broker or the lender. Both are likely to be under pressure which may make communications slower than you would wish. That will only increase any anxiety. There is no value in contacting us to ascertain whether we have heard anything from your lender because they will always contact you first.