Can a mortgage offer be withdrawn? Let’s answer this frequently asked question, why it happens, and what to do if it does.
Can a lender withdraw a mortgage offer?
Short answer: yes. A mortgage lender has the right to withdraw an offer at any time, even after exchange of contracts. They can withdraw the offer all the way up to completion.
Most buyers think that when an offer is issued, it’s guaranteed. This is understandable given that applying for a mortgage can be a difficult process, and the application can take time. But, even if a mortgage in principle is agreed, and the valuation survey checks out, a lender may still withdraw their offer.
The good news is that this is rare – but it can happen.
Why does it happen?
A circumstance that could cause this to happen should be fully outlined in your mortgage offer, but speak to your lender or mortgage adviser, if there’s any confusion.
Some of the most common reasons include:
- The offer expired
- Incorrect/inaccurate information supplied
- Defect with the legal title
- They’ll need to confirm there are no other financial charges secured on the property, for example, but if they’re unable to, your offer could be withdrawn
- Your personal circumstances change
- Loss of a job or redundancy may mean the lender withdraws their offer or reduces the loan amount
- Suspicious activity (e.g. if your finances are linked to fraud)
- Property issues have arisen, such as flood risk
- Failing hard credit checks
What to do if your mortgage offer is withdrawn
While it’s rare, having an offer withdrawn can be extremely stressful, as it could cause the purchase to fall through.
The best thing to do is speak to your lender. For example, if your offer is due to expire, you may be able to get an extension. Work closely with your solicitor here, they’ll be the main point of contact for your lender. You may get an additional month, and then after that they may require you to reapply for the mortgage under new terms.
You should also see if there are any alternative options; speak to a mortgage adviser here. If your lender has withdrawn the offer due to a change in financial circumstances, for example, you could look elsewhere.
If your offer is withdrawn because of inaccurate information, inform your lender of the reason for the inaccuracy and look to complete a new application. It’s important not to lie, or supply false information, as being turned down for a mortgage will show on your credit history. This could affect your ability to borrow in the future.
What to do if your mortgage offer is withdrawn after exchange
Your offer can be withdrawn at any stage, even after the exchange of contracts. At this late stage, you’re likely to incur costs. This can be expensive, as you’ll be left to bear the costs to complete (and the ones you’ve spent so far, such as the survey).
Again, the best thing to do is speak to your mortgage adviser and see what options are open to you. It could be a reapplication, or a new lender. You should also speak to your solicitor, they’ll be able to provide legal advice.
If there’s an opportunity to negotiate, your adviser might be able to do this on your behalf.
Can your offer be withdrawn after completion?
No, however, if you breach the terms of your offer or fail to keep up with repayments, your lender may seek legal action or try to repossess your property.
How to avoid this
Again, this is a rare thing to happen to home buyers. However, reduce your risk:
- Doing everything in your power to keep things moving (some things will be out of your control, others won’t)
- Be responsive and communicative
- Work closely with your solicitor and ensure they’re proactive
- Know the details and timelines of everyone in the property chain
- Keep your lender up to date on any change of circumstances
- Speak to your solicitor about an offer extension if you’re struggling to complete on time
- Speak to a mortgage adviser
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Your home may be repossessed if you do not keep up repayments on your mortgage. Terms and conditions apply to the mortgage decision promise.
Last Updated: April 6th, 2022