Can a mortgage offer be withdrawn after exchange of contracts - tear up mortgage offer
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Can a mortgage offer be withdrawn after exchange of contracts

25/05/2022
(Last Updated: 25/05/2022)
110,767
5 min read
Securing a mortgage can be difficult, especially since there are multiple factors which can lead to your application being declined. Most buyers think that when a mortgage offer is issued by the mortgage lender that it is guaranteed they will honour the lending facility.

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

Although mortgage offers can be withdrawn, it is only on very rare and extreme occasions where this might happen and the mortgage lender explains what these circumstances are within their mortgage offer.

How can a mortgage offer be withdrawn after exchange of contracts?

Source: Santander UK Plc Mortgage Offer

We have offered you this mortgage based on the information that:

  • You (or your intermediary) told us in your mortgage application;
  • You authorised us to obtain about you; and
  • We have reasonably assumed about the property.

We may withdraw this offer if any of the following circumstances apply and, had we been aware of the true circumstances, we would not have provided the offer to you, or we would have provided an offer of a lower amount or on different terms:

  • There is a material change to the facts and circumstances relating to your loan application;
  • 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;
  • Where we have instructed a conveyancer they are unable to certify the title to the property in accordance with our instructions;
  • There is a change to the condition, value or title to the property or we revalue the property after the date of this offer and such change or the revaluation has a material impact on the suitability of the property as security for the loan;
  • 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;
  • We reasonably suspect you are involved in any criminal or fraudulent activity or you are convicted of a serious criminal offence;
  • Completion of the offer does not take place by the deadline given at the beginning of this offer; or
  • We are no longer permitted to lend the money to you due to our regulator removing or restricting our permission to lend.




Can you get compensation if the mortgage lender withdraws their mortgage offer?

As you can see in the article 'The costs of pulling out after exchange of contracts', the costs for failing to complete after exchange of contracts are considerable. 

None of these costs can be reclaimed from your mortgage lender if they withdraw the mortgage offer because you have breached one or more of the conditions involved.

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

Here are some reasons why your mortgage lender will withdraw your mortgage offer.
Reason
What can you do
Mortgage offer expired
This is the most common situation where a mortgage offer can be withdrawn. A mortgage offer only last 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 then the mortgage lender may withdraw their offer. This is very rare to occur after you have exchanged 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 mortgage lender of the change in your circumstances. The mortgage lender may withdraw the mortgage 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 lender of the reason for the inaccuracy and look to complete a new mortgage application with correct information.


Credit check between exchange and completion

Your mortgage lender completes a credit check when you initially apply to get your mortgage in principal and when they provide your mortgage offer.

Mortgage lenders often complete a final credit check before completion, especially if your circumstances have changed.

Has your mortgage offer been withdrawn?

Our mortgage brokers can help you find a new mortgage and your initial consultation is completely free.

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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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