What To Do If You’ve Had a Mortgage Offer Withdrawn
Bounce back from a withdrawn mortgage offer. Get matched to a specialist broker and get approved
Firstly, have you had a mortgage offer withdrawn in the last 12 months?
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Here, we look at whether a lender can withdraw a mortgage offer, the reasons why this could happen, the different stages when this can occur and where to look for the right guidance if this happens to you.
Can a lender withdraw a mortgage offer?
Yes, a lender can, for reasons set out in their original terms and conditions, withdraw from a mortgage offer at any number of stages (see the section below for why this could happen) during the application process. It is otherwise a legally binding contract for them to extend your loan.
Lenders will only usually withdraw an offer as a last resort. Before doing so, they will generally attempt to find a solution to any issues first. That could potentially mean changing the conditions of the deal – such as the loan term or the amount you can borrow.
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Reasons why a mortgage offer can be withdrawn
The main reasons and circumstances surrounding why a mortgage offer can be withdrawn are as follows:
Your mortgage offer will only be valid for a certain amount of time. After that period – if you’ve been unable to satisfy all of the criteria requirements for the home loan it can be withdrawn. Offers are usually good for 6 months, though some may be as long as a year.
Once you have an offer, a mortgage lender will run checks on you to ensure that you have been 100% honest on your application. They will want to make sure you are not committing fraud when purchasing the property and that your deposit or funds come from legal sources.
Any differentiation between the documentary evidence they review (bank statements, proof of income etc.) and what was on the original application could lead the lender to withdraw their offer.
Change in your circumstances
During a property purchase, you could experience a change in your circumstances that affects your financial situation and therefore your offer’s affordability criteria. If you are made redundant for example, or if there is a large increase in your regular outgoings, lenders may no longer view you as an eligible candidate. Discussing these changes with your lender is always advisable as they may change the terms of your deal to ensure your mortgage still goes through – though perhaps with a longer period or lower amount.
If, upon running a hard credit check, mortgage providers find a bad credit issue not uncovered previously, they may see you as too big a risk and withdraw their offer instead. Lenders view credit issues differently – some could withdraw an offer due to a missed bill payment years ago, while others may be happy to accept your application despite this.
You can download your credit reports to see how your credit record currently looks before you consider re-applying.
When providers extend an offer, it is under the condition that the house acts as an asset to protect their loan. If, upon surveys and valuation checks, the lender finds problems affecting how much the property could return in the unfortunate event of a repossession, they may withdraw an offer in extreme cases. Sometimes, they may merely alter the amount they are willing to lend.
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What to do if this happens
Having a mortgage offer withdrawn can be stressful – at whatever stage of a property purchase. Your potential provider will have given you the reason for withdrawing the offer, which you may be able to solve by talking with them and a broker.
If the reason behind the withdrawal cannot be resolved, it is important not to apply for another mortgage immediately. Several applications in a short space of time could potentially affect your credit rating and therefore affect your ability to get a mortgage. Instead, again, the best thing to do is to speak to a broker.
Brokers will have experience in withdrawing mortgage offers and knowing the best course of action for you and your circumstances. Plus, they’ll likely be able to find the most suitable solution in a far quicker time than you could do on your own. They’ll know how your withdrawn offer affects your situation in addition to which lenders could offer you a new mortgage – in the time you have available, at a rate and amount you can afford.
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At what stage can a mortgage offer be withdrawn?
Mortgage offers can be withdrawn at any stage up to the day of completion. Withdrawals become rarer later in the purchase process as providers will ordinarily have found, and hopefully resolved, any issues earlier on.
If a mortgage provider has made you an offer, they could withdraw it before exchange if they unearth any issues in your application – for example, if they detect suspicious activity.
While a mortgage offer being withdrawn after exchange will be expensive for the borrower, it can happen. Any one of the reasons mentioned above could be why a provider rescinds its offer. Reading through the terms of your offer can help reduce the chances of this occurring.
Day of completion:
In rare cases, offers can even be withdrawn on the day of completion. It’s unusual that this occurs as ordinarily any issues affecting your eligibility for the mortgage will have been identified before it gets to completion day.
You will likely incur hefty costs at this point in the process which is why it’s a good idea to seek the advice of both your solicitor and a mortgage broker at this juncture. They can both help explain the situation and your best options going forward.
Mortgage offers cannot be withdrawn after completion, but if you breach any terms of your mortgage, you may find yourself liable to legal action from your mortgage provider.
To minimise the risk of your mortgage being withdrawn at any stage, or being in breach of contract after your mortgage has been extended, be sure to:
- To keep your mortgage provider informed of changes to your circumstances – such as a redundancy.
- Be honest on your application, with all details filled out correctly. A broker can prove invaluable in helping you do so.
- Speak to your solicitor about negotiating an extension for you if it looks like your offer period is going to run out before your purchase is finalised.
Can you cancel a mortgage application?
As a mortgage applicant, you have the right to cancel your application at any point up until completion. However, do be aware that you will likely be liable for costs incurred up to that stage – such as a product fee for example.
The later on in the process you are, the higher your costs are likely to be. Before cancelling your application, it is important that you speak with your solicitor and read through any terms and conditions of your offer. The information explaining how you will be affected will be included there.
Speaking with a broker about your application would also be helpful. They will know how cancelling your application could affect your future options.
Speak to a broker to help you through your application
Having a mortgage offer withdrawn can be frustrating and worrying. It has the potential to derail your property purchase plans completely, but that does not have to be the case. Seeking the advice of a mortgage broker can mean you could either resolve the issue with your potential provider or find another lender willing to extend you a mortgage despite the issues with your withdrawn offer.
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