What To Do If Your Mortgage Offer is Withdrawn

Having your mortgage offer withdrawn can feel like the rug has been pulled out from under you. Worse still, if this happens after the exchange of contracts you could lose a lot of money. The important thing is not to panic – there are solutions available!

This article will guide you through why a lender might withdraw a mortgage offer, which stages in the process it might happen, what your next steps should be and where to look for guidance.

Can a mortgage offer be withdrawn?

Yes, it’s possible. It can happen at any stage of the process, including after the exchange of contracts. In very rare cases, a mortgage offer could be withdrawn on the day of completion, which is why you should normally leave as little time as possible between exchange and completion – usually just a few days but this will depend on what your solicitor advises at this point.

Reasons an offer can be withdrawn

When you initially get your mortgage offer, the paperwork will include all of the reasons why it could be withdrawn.

The most common causes are:

Your offer has expired

Most mortgage offers are only valid for 3-6 months, and you’re expected to complete your purchase within that time. But that’s not always possible if there’s a delay, such as with the construction of a new build. Once the offer has expired, that mortgage product may no longer be available (for instance, because interest rates have changed), so the lender cannot give you the same deal again.

Change of circumstance

If you lose your job, have your salary cut, or experience some other change that affects your income, the lender may withdraw your offer if they believe you can no longer afford the repayments.

Problem with the property

A problem might be discovered with your house that affects its value or means the lender won’t lend against it. For instance, the survey might show that it’s built on a former landfill site, or there’s a fault with the legal title.

Inaccurate information

If you made a mistake when filling out your mortgage application, or left out something serious like having a criminal record, and the lender finds out, they may withdraw your offer. Usually, working with a broker will help you avoid making mistakes, as they will check your paperwork to make sure it’s correct.

Suspicious activity on your account

If they find suspicious activity on your account, such as large amounts coming in and immediately going back out with no tangible explanation, the lender may suspect you could be involved in fraud and withdraw the offer.

Bad credit history

Your lender will complete credit checks when you first apply for a mortgage in principle and when giving you an offer. Usually, lenders won’t do further checks, but because of Covid-19 and the current economic uncertainty, careful lenders are doing additional checks.

If the check shows your credit score has dropped or there are new debts in your name, the lender may reconsider lending to you. It’s important to check your credit report regularly.

The bank’s rules have changed

Sometimes there’s nothing wrong with you or your property, but there is a problem with the lender. For instance, their regulator may have removed their ability to lend because they’re having financial problems. Or the lender’s rules have changed and they can no longer lend on the type of property you are buying, because it’s on a floodplain or above a shop. Basically, the lender is saying: “It’s not you, it’s me.”

What are the different stages a mortgage might be withdrawn?

A mortgage offer can be withdrawn at any stage, but the impact it might have for you will differ:

Before exchange

This is annoying and could delay your purchase, but as you haven’t yet exchanged contracts, it’s not a big problem. You still have time to secure a mortgage with a different lender, so talk to your solicitor or a broker for advice.

After exchange

This can be more serious, because after the exchange of contracts, you’re legally obliged to purchase the house. You could incur serious costs, including losing your deposit, if you pull out of a purchase after exchange. You should speak to your solicitor about an extension, as well as talking to a broker who can identify new lenders for you to approach.

On the day of completion

This is possible, though it’s very rare. However, it is very serious, as you may end up losing your deposit and other non-refundable fees. You should immediately seek legal advice if this happens.

After completion

Technically, a mortgage cannot be withdrawn after the point of completion unless the lender has evidence of serious fraud. But if you fall behind with repayments or do something to break your agreement, your lender may repossess your house.

What are your options?

If you’re mortgage offer has been withdrawn, here’s a few simple steps you can take to get things back on track:

Speak to an experienced mortgage broker

If speaking to your lender doesn’t fix the problem, your next move should be to make an enquiry with us so we can match you with a whole-of-market mortgage broker.

Our free service will match you with the right mortgage advisor for your needs. They will help you find the best deals you qualify for and lenders who are the least likely to withdraw an offer.

Call 0808 189 0463 or make an enquiry and we’ll match you with a broker for a free, no-obligation chat today.