How A Change Of Circumstances Can Affect Your Mortgage Application

Life can be unpredictable. If you’re in the mortgage application process and your circumstances change, it’s worth knowing the rules and whether amending your mortgage offer is necessary.

This guide covers everything you need to be aware of if your circumstances change before completion. We’ll explain what you can and can’t do and where to find expert support if you need to notify your lender of a change.

Keep reading for a complete breakdown of the rules regarding a change of circumstances, or click on a link below to jump straight to a section…

What constitutes a change of circumstances during a mortgage application?

This can depend on the lender you’re dealing with. Each will have rules around what a valid change of circumstance must be reported. For most lenders, anything to do with your financial situation or an income change after a mortgage offer is made is something they’ll need to be notified of.

Here are some other specific examples of potential valid changes of circumstances that could impact your mortgage offer:

• Adverse changes to your credit reports.
• Changing jobs or becoming self-employed after a mortgage offer or approval.
• Changing the property you want to buy after a mortgage offer.
• The property’s official valuation is much higher than your original offer.
• You’ve become seriously ill, bankrupt, or are facing redundancy.

Can a mortgage, in principle, be changed or withdrawn due to a change in circumstances?

This can happen, but it largely depends on how the change of circumstances is reported and managed, along with the nature of the change. Depending on the severity of the difference, your mortgage, in principle, may need to be altered or potentially withdrawn.

But, you have a ‘duty of disclosure’. Your offer can be withdrawn if you fail to notify your lender of a change that could affect your ability to repay the mortgage. This is especially likely if it’s discussed in their terms and rules. If this happens, the lender may also add visible notes to your application for potential future lenders to see.

Changing the property you want to buy after a mortgage offer has been made

This can be done, but it may mean amending your mortgage offer. The bank or lender you use will organise for another valuation to take place on the new property. If the new property is cheaper than the first, some lenders may only let you move your mortgage if you keep the same loan-to-value (LTV) ratio.

Alternatively, suppose the new property is more expensive. In that case, you may need to put down a larger deposit than you originally planned if you were already at the lender’s maximum LTV limit for the first house. The type of property you’re changing can also make a big difference.

Lender requirements and mortgage rules after a change

Here are a few examples detailing how a change in your current circumstances could impact your position in the eyes of some lenders:

• Bad credit: if it’s the case that something has happened recently to cause adverse credit, lenders will want to take a detailed look into the age, severity, and reason for the bad credit. Don’t worry if this happens to you; a skilled broker will still be able to help you obtain a mortgage, perhaps with a specific bad credit lender if necessary.
• Changing the source of income: For those of you who’ve transitioned away from employees, you may struggle to show the necessary trading activity and accounts to qualify for the mortgage you’ve been offered. If this happens, you may need to look into alternatives such as guarantor mortgages or joint mortgages.
• Reduced income: you may find that your salary or wages are now at a different level. If that happens, you may have to explore other options with your broker to help boost your application. This could involve including any additional money you earn from commission, bonuses, and overtime. Or, you may need to move your application to a specialist low-income lender.

How a broker can help with a change

Changing circumstances needn’t be a cause for concern as long as they’re managed correctly. Having the support of an experienced broker throughout the process means they can advise you on the steps to take, even if they involve amending your mortgage offer or finding a new lender.

It is useful to discuss your change with a trusted mortgage broker straight away because they will know each lender’s terms and rules inside out. An expert broker can provide you with qualified and relevant information and instruct you on what changes you need to disclose to meet your obligations.

Each situation will be unique to your particular change of circumstances and the lender you’re dealing with. However, the assistance of a skilled advisor is universally applicable and can help ensure you don’t make any missteps that jeopardise your house purchase.

If you’d like to speak with a specialist mortgage broker to assist with your application, just make an enquiry. We’ll introduce you to a knowledgeable advisor for free.

How changes can affect your credit score

A change of circumstance in itself may not affect your credit. But it depends on what the change is. Changing jobs after a mortgage approval or getting reduced hours won’t directly impact your scores, but missing debt payments might.

However, if your circumstances change, your mortgage offer will be withdrawn, and this will appear on your credit file. Because technically you’ve been declined a mortgage. This is why any changes should be managed with the help of an expert broker. It will reduce the chance of any unnecessary rejections or unwanted marks on your credit file.

If you want to check your credit score for yourself, visit our credit reports hub to learn how to do it for free.

Speak with a mortgage application expert.

Navigating a change of circumstance can be tricky and complex, with each lender having its own rules. Notifying them of a change and potentially amending your mortgage offer will be a much smoother process under the guidance of an experienced broker.

The brokers we work with are experts in managing changes during the home-buying process’s application and mortgage offer stages. We’ll quickly assess your situation and pair you with the most suitable advisor.

Just call 0330 818 7026 or make an enquiry. We’ll set up a free, no-obligation chat between you and your ideal mortgage broker today.