Mortgage withdrawal after exchange of contracts

Buying a home can be a stressful process at the best of times, and the last thing you need is being told that your mortgage offer is being withdrawn at the final hurdle, after you have exchanged contracts. 

In this article, our expert team of mortgage advisers at PIL Southampton explains why this might happen, and what you can do if it does.

Can a mortgage offer be withdrawn by a lender? 

It’s not that common, but yes, a mortgage lender has the right to withdraw their offer at any point before your sale completes. 

There will be a section in the terms and conditions provided by your mortgage lender that spells out the circumstances that might mean your mortgage offer could be withdrawn. If you read this carefully and do your best to avoid these circumstances, it should minimise the chances of your mortgage offer being revoked.

Why might a mortgage be withdrawn after exchange? 

Mortgage offer expiration 

The most common reason for a mortgage offer being withdrawn is simply because it has expired. All mortgage offers have a time limit. After a set period, usually three to six months, the lender has a right to withdraw their offer.

If you feel that the sale process could be delayed past the mortgage expiry date, let your mortgage provider know as soon as possible. The more notice you give them, the more likely they are to extend your mortgage offer.

Change in circumstances 

If your financial situation has changed during the mortgage application process and, after exchange of contracts, your lender believes that you no longer meet their affordability criteria, they could withdraw their offer. It might be that your income has significantly reduced, or your outgoings have substantially increased.

Suspicious activity 

Your mortgage lender is within their legal rights to withdraw your mortgage offer at any time if they have evidence of money laundering, potential fraud, or any other type of financial misconduct. 

They could also decide to withdraw your mortgage offer if they discover that information you have provided as part of your application is false.

Adverse credit has been discovered late into the process 

Although the mortgage application process should mean that any issues with adverse credit are identified by the lender much earlier than your exchange date, and certainly before they give you a mortgage offer, it can happen.

Some lenders do a final sweep of credit checks before completion. This could be due to your application being more complex than most, and needing more scrutiny by their underwriting team, or something could have been flagged that leads them to believe your credit rating has changed since the process started.

Problems with the property you’re buying 

It might be the case that, late in the process, information comes to light about the property you are buying that affects its value and therefore the lender’s potential in recouping the value of the loan in the event of your defaulting. 

An example of this could be contaminated land being identified during the conveyancing checks. Hopefully, this would have been raised earlier in the process, but sometimes surprises can surface late in the day.

A mistake on your application 

You would hope that any errors in your application would be spotted a lot of earlier than after contracts have been exchanged. However, these things do happen. It could be the smallest detail, like a discrepancy in the spelling of your address, or your proof of income being out of date.

This is why it’s crucial to check, check and check again that your application is 100% accurate and your accompanying documents all meet the lender’s criteria.

Using an experienced mortgage broker, like the team at Southampton PIL, should minimise the chance of there being a mistake on your application.

When in the process can my mortgage offer be revoked? 

It’s by no means the norm but, technically, a mortgage lender can withdraw your mortgage offer at any point in the process – any time before the moment of completion.

What should you do if your mortgage is withdrawn after exchange?

It’s easy for us to say, but don’t panic! We understand that this would be the worst news to hear so late in the day, but it is possible to reverse a declined mortgage application, and we are here to help. 

We would advise you not to apply with another lender immediately. If they also reject you, it could affect your credit report and reduce the chances of you securing a mortgage in the short term.

An independent mortgage adviser can use their experience to liaise with the lender who has withdrawn your offer on your behalf. This will give you the best chance of either getting your lender to overturn their decision to withdraw your offer or help you to find a better deal elsewhere.

Finding out as soon as possible exactly why the lender has withdrawn your offer will mean that you can hopefully resolve the issue quickly and get your mortgage offer back on track.

How PIL Southampton can help you 

Our qualified and experienced team of independent financial advisers is here for you every step of the way of your mortgage application process, whatever curveballs may get thrown at you. You can be reassured that we will use our expertise to be rigorous with your mortgage application, hopefully minimising the risk of your mortgage offer being withdrawn at any point in the process.

How you can contact PIL Southampton

You can email us, fill out the contact form on our website or call us on 02380 668407. We look forward to hearing from you.