The withdrawal of a mortgage offer can be a deeply unsettling experience, especially if it occurs at a critical stage in the home-buying process.
This guide aims to provide a comprehensive understanding of why mortgage offers may be withdrawn, the various stages at which this can happen, and the proactive steps you can take to move through this challenging situation.
How long does a mortgage offer last?
Mortgage offers are only valid for between 3 to 6 months. The difference will depend on the lender and the type of mortgage, but 6 months is quite common.
The lender will expect you to complete the property purchase (or remortgage) within this timeframe.
Once the offer expires, you no longer have a valid mortgage to draw down.
Can a mortgage offer be withdrawn?
Yes, a mortgage offer can be withdrawn at any stage of the home-buying process, even after the exchange of contracts. In extremely rare cases, it may be withdrawn at the point of legal completion.
Fortunately, withdrawing or cancelling a mortgage offer does not happen too often and lenders need to have a good reason for doing so.
Make sure you are aware of the expiry date and that you have complied with all of the lender’s requirements.
Reasons for withdrawing an offer
It’s important to understand that there are various factors that could lead a lender to reconsider or withdraw a mortgage offer.
One such situation arises when a lender decides to re-evaluate your personal circumstances. This reassessment involves taking a fresh look at your financial situation before finalising the release of funds. If, your current status has declined, or you now have bad credit, there’s a possibility that your application might not proceed as hoped.
Not all lenders will re-check your credit status prior to releasing the mortgage funds. But if they do it will allow them to pick up on any new credit or loans you have applied for since the mortgage application.
Changes in life circumstances can also trigger this process. For instance, if you experience unexpected job loss, lenders will naturally review your ability to manage the monthly mortgage payments. Your financial stability is a key concern for them.
Additionally, lenders are likely to act if they uncover connections to fraudulent activities within your financial history. Instances where fabricated documents related to your income or expenses have been submitted could lead to such a decision.
Honesty in your mortgage application is of utmost importance. Providing accurate information is not only the ethical approach but also safeguards you from potential consequences. Deliberately providing false details could result in serious repercussions, including potential legal actions due to fraudulent misrepresentation.
OUTSIDE INFLUENCES
One reason that you can’t control is outside influences on the UK’s economy and interest rates. For example when interest rates change unexpectedly or a global pandemic makes us all stay at home. When these situations arise lenders can act extremely quickly and sometimes a bit hastily. They will remove mortgage products with just a few hours notice, cancel applications and withdraw mortgage offers.
What to do if your mortgage offer is withdrawn
Having a mortgage offer cancelled is going to be unexpected and extremely annoying.
It’s important not to panic.
And definitely don’t react by immediately applying again with a new lender.
The mortgage lender should give some indication as to why they felt the need to cancel your mortgage application.
Contact the lender and try to get as much supporting information as possible. Once you’ve got all of the facts, talk to them to see if you can provide any further details to help change their mind.
If this is not successful then the best thing to do is speak to a whole of market mortgage broker. They will have experience in helping other borrowers in the same situation.
Once they have understood the underlying reason, they can get to work finding a lender that will be happy with your situation.
What to do if your mortgage offer is withdrawn after exchange of contracts
Your offer can be withdrawn at any stage, even after you have exchanged contracts.
For the majority of people moving home, completion of the chain happens around 5-14 days from exchange. Your solicitor won’t allow exchange of contracts to take place without you having a valid mortgage offer in place.
Having an offer cancelled at this critical stage is undoubtedly going to cause some delays.
Once the contract exchange takes place, you’re bound by law to buy the house. If you decide to withdraw from the purchase after this stage, it could result in substantial expenses, such as forfeiting your deposit. To address this, you need to consult your solicitor regarding the possibility of an extension. It’s also a good idea to talk this through with a broker who can help you find alternative lenders to consider.
Can a mortgage offer be withdrawn after completion?
Though extremely rare, this is a critical situation requiring immediate legal advice.
Technically, a mortgage cannot be withdrawn post-completion unless there’s evidence of serious fraud.
Working with a mortgage broker
If you have been using a mortgage broker since the start then getting to the bottom of these types of issues is much quicker, and they can then suggest ways of getting your mortgage back on track.
If you haven’t used a broker then it’s essential to find one asap.
You need to locate a whole of market mortgage broker, or an independent mortgage broker.
They will be able to access deals from over 100 lenders, so there’s sure to be something suitable for you.
Respect Mortgages can put you in touch with one of the UK’s largest and most experienced independent brokers. They have qualified advisers all over the country, who are waiting to help you.
Call us on 0330 030 5050 or click the button below to get started.
