What to do if You’ve Had A Mortgage Refused After the Contract Exchange

Having a mortgage application declined after the exchange of contracts has taken place is relatively rare, 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 In this guide, we’ll tell you exactly what to do if you’ve had a mortgage offer withdrawn after the contract exchange and explain how to get your plans back on track as quickly as possible.

What to do if you’ve had a 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 it is possible to revive a mortgage application that has stalled after contract exchange.

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

1. Don’t rush into another application: First of all, take a quick breather and don’t rush out to another mortgage lender right away. 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 as far as 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 free broker-matching service that can instantly pair you with a mortgage advisor who specialises 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 take a 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 also search the entire market in case there’s a better alternative out there.

Timing is of the essence when you’ve had a mortgage offer withdrawn after the exchange of contracts, so it’s a good idea to speak to an expert right away. Make an enquiry with us and we’ll quickly match you with a broker who can go through your options with you 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. In fact, 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, there’s a good chance the lender will withdraw your mortgage application before completion.

Your affordability has changed

If your mortgage lender has any reason to believe that your financial situation might change, they have the right to reassess it after 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 out with a quick fact-find to establish why you were rejected after exchange and what can be done about it.

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, but will also 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 inside out, 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 free of errors.

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

Yes, and this can happen for many of the same reasons we have discussed above. In addition to this, some Help to Buy mortgages hit a snag at the Authority to Exchange (ATE) stage. This is an extra step in the process 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 it 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 who specialises in Help to Buy mortgages. They can advise you on whether there is any room to salvage your application by renegotiating with the agent and/or lender.

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

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 that’s a high street bank or a specialist lender.

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

Call 0808 189 2301 or make an enquiry and we’ll arrange a free, no-obligation chat between you and a mortgage broker who specialises in reviving withdrawn applications today.