Had a Mortgage Refused After The Contract Exchange?

It is relatively rare for a mortgage application to be declined after the exchange of contracts, but it can happen from time to time, and when it does, people often feel like their homeownership dream is hanging by a thread.

We understand that hitting a snag so close to completion can be frustrating and upsetting, not to mention stressful, but don’t for a second think that you’re out of options.

In this guide, we’ll explain exactly what to do if a mortgage offer is withdrawn after the contract exchange and how to get your plans back on track as quickly as possible.

Mortgage refused after contract exchange

First of all, banish any thoughts you have about this being the end of your mortgage plans. It’s only natural to feel stressed if you’ve had a mortgage declined just before completion, but reviving a mortgage application that has stalled after contract exchange is possible.

Here are the steps to give yourself the best chance of reviving your application…

1. Don’t rush into another application: First, take a quick breather and don’t rush out to another mortgage lender immediately. Another rejection at this stage could impact your credit report and jeopardise your chances of getting a mortgage in the near future, the next steps are crucial, and you need to get them right.
2. Get the right advice from an expert: You will need specialist advice from a mortgage broker if you made it to the exchange of contracts stage before being declined. The right broker will give you the best possible chance of either successfully appealing against your lender’s decision to withdraw your application or finding a better deal with another mortgage provider. We offer a broker-matching service that can instantly pair you with a mortgage advisor specialising in these things.
3. Let us take things from here: Once we’ve matched you with your ideal mortgage advisor, they will take things from here so you can pause to get your bearings. The mortgage advisor we pair you with will be an expert at overturning mortgage withdrawals. They will take the lead on the renegotiations with your current lender and search the entire market in case there’s a better alternative.

Timing is of the essence when you’ve had a mortgage offer withdrawn after the exchange of contracts, so it’s a good idea to speak to an expert immediately. Make an enquiry with us, and we’ll quickly match you with a broker who can review your options today.

Reasons why a mortgage might be declined after exchange

A bank or any other type of mortgage lender can refuse to offer a mortgage after the exchange of contracts has taken place. They have the right to withdraw a mortgage application at any point before completion, should they have a good reason to do so.

The most common reasons a mortgage might be withdrawn after exchange are as follows…

Bad credit has come to light late on

Bad credit would usually be discovered long before this point, but some mortgage lenders carry out a final credit check before completion.

They might do this if they have any reason to suspect your credit report has changed since the beginning of the process or if your application is complex and needs additional scrutiny from the lender’s underwriting team.

If the bad credit found after the contract exchange is deemed to be too severe, the lender may withdraw your mortgage application before completion.

Your affordability has changed

If your mortgage lender has any reason to believe your financial situation might change, they have the right to reassess it after the exchange. If your income has dropped or your outgoings have significantly risen since you applied for your mortgage, they could pull the plug on your application or rethink the amount they’d be willing to let you borrow.

The lender suspects foul play.

When evidence of possible fraud, money laundering or any other type of financial foul play comes to light, mortgage lenders can legally withdraw a mortgage application at any time.

An error on the application

A simple error on your mortgage paperwork can derail your application at any point, even after the exchange of contracts. This could be something as minor as a misspelt address or outdated proof of income – needless to say, you should double-check everything!

How we can help you overcome these problems

The mortgage broker we match you with will start with a quick fact-find to establish why you were rejected after exchange and what can be done.

To get your plans back on track as soon as possible, they will explore whether there are grounds to appeal against the lender’s decision to turn you down for a mortgage. They will take the lead on the renegotiations and search the entire market to check whether switching to a different mortgage lender is the best and quickest way to revive your plans.

The brokers in our network have deep working relationships with lenders who…

• Offer second chances to borrowers who were declined after exchange
• Can be flexible with all forms of bad credit
• Can offer higher income multiples
• Is willing to approve customers with high debt-to-income ratios

Since the brokers we work with know these lenders, they can negotiate the best rates and deals with them on your behalf. They will also guide you through the re-application process so you can be confident your paperwork will be error-free.

Can a Help to Buy mortgage be refused after exchange of contracts?

Yes, this can happen for many reasons, as discussed above. In addition, some Help to Buy mortgages hit a snag at the Authority to Exchange (ATE) stage. This is an extra step where the Help to Buy agent contacts the conveyancing solicitor to grant them the right to exchange contracts with the developer.

ATE is valid for 28 days but can be declined for the following reasons…

• The agent suspects you’re planning to rent your property out
• They find out you have a history of severe bad credit
• They have reason to believe you’re not a first-time buyer
• They suspect you’re using another government scheme as well as Help to Buy

If you’ve had a Help to Buy mortgage declined at the ATE stage, you should speak to a broker specialising in Help to Buy mortgages. They can advise whether there is room to salvage your application by renegotiating with the agent and/or lender.

If this is not an option, they may be able to recommend another government scheme, such as the mortgage guarantee scheme, that might be a better fit for you.

Where to get the right advice if a specific lender has declined you after exchange

The mortgage brokers we work with can help you regardless of which lender turned you down after exchange, whether a high street bank or a specialist lender.

You might, however, want to take a look through the guide pages we have dedicated to customers who have been declined by the specific mortgage lenders listed below…

Call 0330 818 7026 or make an enquiry, and we’ll arrange a no-obligation chat between you and a mortgage broker who specialises in reviving withdrawn applications today.