Glossary
Letter of offer
Also called: loan offer, facility offer
A letter of offer is a lender's formal offer to provide a loan on stated terms and conditions. Once the borrower accepts and any conditions are met, it leads to the loan agreement and security documents.
An example
Following a satisfactory valuation, a lender issues a letter of offer. The borrower's solicitor reviews it, the borrower signs and returns it, and the lender's solicitor prepares the mortgage documents.
Why it matters
A letter of offer may still contain conditions that must be satisfied before settlement. Reading it carefully, and getting legal advice, helps avoid surprises late in the process.
Points to check
Read the letter of offer in full before accepting, and compare it with the term sheet. Check the amount, term, interest, every fee, security, conditions precedent and the date the offer expires. Ask what is still subject to credit assessment, valuation or legal review. Once you accept, some fees may become payable even if the loan does not settle, so understand the commitment before signing.