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Can a mortgage offer be withdrawn after exchange of contracts; the lender's representative tears up the mortgage offer in front of a worried borrower

Can a mortgage offer be withdrawn after exchange of contracts

(Last Updated: 05/04/2024)
8 min read
Key Takeaways
  • Yes, your mortgage lender can withdraw your offer right up to completion.
  • There are specific reasons why your lender may be able to withdraw the offer, which will be specified in the offer itself.
  • If there is a change of circumstances which means you won't be able to manage your mortgage repayments, your offer will be withdrawn.
  • If you fail to complete, there are penalties and you may lose your deposit.
  • You should be aware of your credit report and aim to keep your credit commitments down and your credit history as healthy as possible.

Securing a mortgage can be difficult, especially since there are multiple factors which can lead to your mortgage application being declined. Most buyers think that when a mortgage offer is issued by the lender, it is guaranteed they will honour the lending facility.

The reality, though, is that the mortgage lender can withdraw their mortgage offer after exchanging contracts and all the way up until completion, leaving you to bear the costs of failing to complete.

Whether you're an experienced home mover or a first time buyer, you have enough to stress about, so it's important to note that although mortgage offers can be withdrawn, it only happens on rare and extreme occasions, which will be explained within their offer:

Top tips from our CEO
  • 1 Do not borrow any money between offer and completion; this includes big spends on your credit cards, hire purchases, or other purchases on finance.
  • 2 Be extra mindful when you're buying a new build which isn't finished yet. An offer only lasts six months and can be extended by one more. Then, you'll have to reapply (and possibly choose a new lender), which takes weeks.
  • 3 Keep the time between exchange and completion as small as possible to avoid the chance of your circumstances changing

Why use a mortgage broker?

An independent broker has access to the whole market. Each lender you speak to can only advise you on their own products and policies and will naturally be biased against the competition. They can also help with your mortgage application process, and with expediting mortgage applications if you're in a hurry after having one lender let you down.

Our panel of mortgage brokers have access to the whole of the market, so they can present a range of options which are suitable for you; they understand the lending criteria of different banks and building societies, they are 100% impartial and know exactly what pitfalls to look out for, so you have all the information you need to choose the right lender.

Do mortgage lenders do final checks before completion?

Your lender completes a (usually soft) check on your credit history when you initially apply to get your mortgage agreement in principle. They'll then do some final checks before the mortgage offer; this will include a hard credit search which will affect your credit rating. You can check your credit report file with Experian, Equifax, or ClearScore and read our tips on avoiding a bad credit score.

What checks do mortgage lenders do before completion?

Lenders in the UK often complete a final credit check before completion, especially if your circumstances have changed.

Why would a mortgage offer be withdrawn, and what can you do about it?

Here are some reasons why banks will withdraw your offer.

What can you do

Mortgage offer expired

This is the most common situation where an offer can be withdrawn. A mortgage offer only lasts for 6 months, although if you are close to completion of the transaction, your solicitor can request an extension of 2 to 8 weeks.

Defect with the legal title

The solicitor needs to confirm to the lender that:

Source: Metro Bank Plc Certificate of Title

"We have investigated the title to the Property, we are not aware of any other financial charges secured on the Property which will affect the Property after completion of the mortgage and, upon completion of the mortgage, both you and the mortgagor (whose identity has been checked in accordance with paragraph (1) above) will have a good and marketable title to the Property and to appurtenant rights free from prior mortgages or charges and from onerous encumbrances which title will be registered with absolute title."

Where the solicitor reports issues to the lender about the property, the lender may withdraw their offer. This happens very rarely after you exchange contracts.

Change of your circumstances such as the loss of a job

Under the terms of the mortgage, it states "There has been a material change in your circumstances since you applied for the mortgage, which is likely to have a material impact on your ability to afford the loan".

If this happens, you must inform your lender of the change in your circumstances. The mortgage lender may withdraw the offer or reduce the loan amount they will offer you.

Inaccurate information in mortgage application

Under the terms of the mortgage, it states "if we discover that you have intentionally provided us with false, inaccurate or incomplete information as part of your application for the loan or omitted information which we have requested from you as part of your application for the loan".

Under such circumstances, you should inform the mortgage company of the reason for the inaccuracy and look to complete a new mortgage application with the correct information.

What if the mortgage offer is withdrawn on day of completion?

This is extremely rare and usually only happens if you've had a change of circumstances and not been completely transparent with your lender, so they've discovered the issue at the last minute. You'll have to pay any outstanding fees, and you'll almost certainly fail to complete.

Unless you have all that spare cash in your back pocket, you'll have to reapply for a mortgage. This can't be done within a day and so you'll be issued with a notice to complete from the seller's solicitor (you'll have to pay the legal costs for this, too). You'll then have ten working days to complete, or else you lose your 10% deposit and the seller will pursue you for any outstanding costs.

If you need to try and secure a new mortgage in less than ten days, call us today and we'll book you an urgent call with one of our carefully selected panel of mortgage brokers, who can help you get your application in and look to expedite it with your chosen mortgage company subject to their turnaround times.

Was your mortgage declined before completion?

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Andrew Boast of Sam Conveyancing
Written by:
Andrew started his career in 2000 working within conveyancing solicitor firms and grew hands on knowledge of a wide variety of conveyancing challenges and solutions. After helping in excess of 50,000 clients in his career, he uses all this experience within his article writing for SAM, mainstream media and his self published book How to Buy a House Without Killing Anyone.
Caragh Bailey, Digital Marketing Manager
Reviewed by:

Caragh is an excellent writer in her own right as well as an accomplished copy editor for both fiction and non-fiction books, news articles and editorials. She has written extensively for SAM for a variety of conveyancing, survey and mortgage related articles.

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