Obtaining a solid mortgage offer from a lender can bring with it a feeling of being home and dry, but that’s not always the case. As we’ll see in this article, lenders have the ability to dramatically change the path of your prospective property purchase.
So, are lenders able to withdraw mortgage offers at any time?
In short, yes, but they do need to have a good reason for doing so (we’ll get to those in a bit).
As one would expect, the further into the process you are when your mortgage offer is withdrawn, the bigger the headache. A withdrawal of a mortgage offer before contracts have been exchanged is inconvenient, but beyond that things take a very different turn.
Common reasons for mortgage offers to be withdrawn
Somewhere within the reams of paperwork that accompanies your mortgage offer will be the reasons why the lender may decide to withdraw their offer of providing you with a mortgage. We won’t go into each and every one here, as the reasons can vary from lender to lender, but we’ll outline some of the most common:
Mortgage offer has expired
This is probably the most frequent of all reasons why mortgage offers get withdrawn. Mortgage offers generally last for around 3 to 6 months, which is usually plenty of time to tie up the purchase and move into your new home.
Usually, however, is not always. In some instances, such as construction delays on a new development, the timeline of your property purchase can extend beyond the offer’s expiration date.
The problem here is that the original mortgage product you selected may no longer be available, which naturally precludes the lender from simply reoffering the same deal to you.
Before any lender hands over a loan, they are going to make every effort possible to ensure their money is as safe as it can be. They will, therefore, have the property surveyed to ensure that there aren’t any glaringly obvious defects or issues with the home that will affect its market value.
While these surveys are usually straightforward (so straightforward that many surveyors are instructed to carry out a mere desk-based or drive-by valuation on some properties), they can still unearth problems that will lead to a mortgage offer being withdrawn.
False information and other fraudulent findings
If you have provided the lender with false information on your mortgage application, either knowingly or unknowingly, they are well within their rights to withdraw the offer.
The same goes for any other suspicious activity they may uncover during their checks, such as signs of potential money laundering or fraud.
While it’s true that credit checks will be conducted before a mortgage offer is made, it’s not uncommon for lenders to carry out further checks, especially in the current climate of global uncertainty.
Should these additional checks unearth undeclared new borrowing or a sudden drop in your credit score, your lender may see these as red flags and withdraw their mortgage offer altogether.
Change in circumstances
Finally, there’s change in circumstances. These will usually pertain to income, so think about things like pay cuts, job losses, or anything else that will affect the amount of money coming into your account on a regular basis.
Basically, if the lender has reason to believe these changes will affect your ability to afford their repayment terms, they will likely withdraw their mortgage offer.
Can lenders withdraw their mortgage offer after contracts have been exchanged?
Yes, but it’s extremely unusual for it to happen. If it does, the number one reason will be an expiration of the offer, but there are other grounds in which a lender will be within their rights to withdraw, including:
- Defect with the legal title coming to light
- Change of circumstances
- Suspicious activity
- Application errors
Can a lender withdraw your mortgage offer on completion day?
Again, yes they can, but it’s even rarer for this to happen than an offer being withdrawn after exchanging contracts. All associated checks should have been done before completion day, but there have been instances in the past where lenders have been alerted to a red flag or unearthed an error late in the day.
Am I liable for outstanding costs?
This depends, but if your lender withdraws their offer due to a breach of contract on your part you will be expected to pay any outstanding costs associated with the purchase. These can include things such as:
- Surveyor fees
- Conveyancing fees
- Mortgage broker fees
On top of the above, there’s every chance you’ll lose your deposit, too. Not a great situation to be in.
What should I do if I’ve had a mortgage offer withdrawn?
First of all, you should have been informed why the offer was withdrawn.
If you haven’t, contact the lender as soon as possible and ask for an explanation. From here, you can assess your situation and take steps to rectify any problems within your control. Without knowing why the offer has been revoked, you risk a repeat rejection if you go to a new lender.
Once you have the reason from the lender, your next step should be to contact your broker, or get in touch with one if you weren't already using their services. Brokers frequently deal with situations such as this, so they’ll be best placed to advise you on your next course of action. They can also act as an intermediary between you and your lender.
If your broker doesn’t have any success with your current lender, you’re going to need a new mortgage provider. Ask your broker to find the best deals available, as they will have access to the whole market and all the products out there. This includes specialist lenders who may be willing to take on clients like you who struggled to get a high street provider to lend to them.
That’s it for another week. If you found this post useful and would like more of the same every Monday, you can subscribe to our blog here. We’ll email you each week with our latest property article, along with a few properties to check out as well.
If you’re thinking of getting into the property market in or around East London and West Essex, whether you’re a buyer, seller, landlord, or tenant, Petty’s should be at the top of your reputable estate agents list. Give our friendly team a call today to find out why we’ve been Wanstead’s number one choice for over a hundred years.
Kinga has been in sales since she was 17 and she already has both Negotiator and Sales Progression qualifications under her belt. She is bilingual, has a weakness for chocolate, and cites Robins Pie & Mash and The Cuckfield as her favourite Wanstead haunts.020 8530 9920 / Email Directly