Mortgage basics
Loan offer: cooling-off period, validity, and how to avoid starting over
The cooling-off period is counted to the day, the validity of the terms, and the modifications that require a reissue: accept your offer without losing time.
A loan offer cannot be accepted immediately: the law imposes a cooling-off period, counted from the day following its receipt, and the acceptance is only valid after its expiration. The lender remains bound by its terms for a separate minimum duration. Any modification to the amount, the term, the interest rate, the security or the insurance requires the offer to be reissued, and the cooling-off period starts again from zero.
By Sandy MASCART, mandataire d'intermédiaire en opérations de banque et en services de paiement ORIAS 26000541 sous le mandat de CDV PATRIMOINE & ASSURANCE (ORIAS 14005573)
Key points
- The loan offer is the first document in the process that actually binds the bank, unlike an agreement in principle or a simulation.
- An unshortenable cooling-off period runs from the receipt of the offer, distinct from the duration during which the lender remains bound by its terms.
- Any modification to a numerical or specified element of the offer requires it to be reissued, which causes the cooling-off period to start again from zero.
- Once the offer is accepted, no withdrawal period protects the borrower any longer: the cooling-off period applies before the signature, not after.
- For a purchase financed by drawdowns, interim interest accrues from the first release of funds, even before the start of the amortisation.
The loan offer binds the bank, and it is the last moment to correct an error without starting over. Check it line by line and count the cooling-off period to the day. In the process of a mortgage, the previous step: the documents to provide.
What does a loan offer contain and what must you check line by line?
Borrowers, property, amount, term, interest rate, total cost, guarantees, insurance and repayment schedule. Once accepted, it constitutes the contract: what is not included has not been promised.
Compare two offers on the annual percentage rate of charge, and the insurance on its total amount in euros.
The errors to look for:
- An insurance premium different from the one negotiated (changing insurance).
- A mortgage instead of a guarantee (the cost of guarantees).
- An unrequested amortisation deferral.
- Insurance on the wrong basis.
- An incorrect name, address or account.
Section by section: reading a loan offer line by line. To compare banks: the European Standardised Information Sheet.
How is the cooling-off period calculated?
From the receipt of the offer: you cannot accept it before its expiry. The bank, however, remains bound by its terms for a separate minimum period.
- Délai de réflexion de l'emprunteur 10 jours
- Maintien minimal des conditions de l'offre 30 jours
La première ligne est le délai pendant lequel vous ne pouvez pas accepter. La seconde est la durée minimale pendant laquelle la banque reste tenue par les conditions de l'offre.
- En vigueur depuis le
- Source
- Article L. 313-34 du code de la consommation — Légifrance
- The start is the receipt, not the printing or the sending.
- The day of receipt does not count.
- You sign on the day after the last day: hence the figure that circulates.
- Keep proof of receipt.
- Date the acceptance on the day of sending.
Accepting earlier is refused. Later, each day of delay postpones the release of funds.
How long is the bank bound by the terms of the loan offer?
For the minimum retention period, from the date of receipt. Beyond that, without acceptance, the terms may change.
Do not allow the signature at the solicitor’s office to exceed this period. Is a suspensive condition approaching? It is that condition which governs: loan refused after preliminary sale agreement.
What changes oblige the bank to reissue the loan offer?
Any quantified or qualified element: amount, term, interest rate, security, insurance, borrowers, purpose. A reissued loan offer resets the deadline to zero.
The cases I encounter most frequently:
| What changes | Reissue | Why |
|---|---|---|
| Loan amount revised, upwards or downwards | Yes | The amount is an essential element of the loan offer |
| Term modified, deferred payment added or removed | Yes | The repayment schedule and total cost change |
| Security replaced after refusal of the guarantee | Yes | The nature and cost of the security are quantified in the loan offer |
| Insurance share or policy modified | Yes | The cost of the insurance and the annual percentage rate of charge are recalculated |
| Addition or removal of a co-borrower | Yes | The parties to the contract change |
| Disbursement date postponed | No, in principle | It relates to execution, not to the terms |
| Material error on an address or a name | Depending on the bank | Many institutions reissue out of caution |
Settle the insurance share, quotes and security before the issue: a few days of patience are better than a reissue.
What happens between acceptance and the release of funds?
The bank transfers the funds to the solicitor, upon their request, for the execution of the deed. In the meantime: checks, security, and transfer.
The solicitor, the pivot of the actual timeline
What I systematically advise: ask the solicitor, as soon as the loan offer is accepted, the date on which they will call for the funds — not the date of signature.
When funds are released in instalments
In the case of off-plan purchases or works, the bank releases funds at each call for funds. You pay interest on what has already been paid.
These interim interest charges are outside the repayment schedule. Still a tenant, you pay rent and interest: calculate it. A deferral of capital repayment can be negotiated before the schedule is issued.
No intermediary can demand any sum from you before the release of the funds.
Can one renounce after having accepted the offer?
No: there is no right of withdrawal after acceptance. What remains are the clauses of the contract or an early repayment.
The cooling-off period is your only protection: use it.
Has your offer arrived? Create your file or have it reviewed by telephone during the period.
Sources
Read next
- Mortgage in Lyon: frequently asked questions
- The cooling-off period for the preliminary sale agreement or the reflection period on the loan offer: no longer confusing them Cooling-off: renouncing the purchase. Reflection: not accepting the loan too soon. Start, form and effects of both periods, so you lose nothing.
- Mortgage application: the exact list of documents to provide The documents required by profile, the order that avoids a three-week delay, and what the bank really reads in your last three bank statements.
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