Can mortgage providers withdraw a mortgage offer?

The short answer is yes. Mortgage providers are technically allowed to withdraw a mortgage offer right up to the moment you actually complete on a sale. As a buyer, you could think your mortgage is secured after the mortgage offer, after signing the mortgage deed, or even after the exchange of contracts. But actually mortgage offers aren’t guaranteed until you have the keys in your hand. A late offer withdrawal is pretty rare, but not impossible, and with the rise in late withdrawals in September 2022, it’s understandable to have some questions.

If you’re wondering what a mortgage deed is, you can check out our blog ‘What is a mortgage deed?’

When can mortgage lenders withdraw an offer?

A mortgage provider can, in theory, withdraw a mortgage offer right up until the moment you complete your purchase of a home. This includes withdrawing the offer literally on the day of completion, although this is very rare. We’ll take a look at why a mortgage provider might withdraw an offer shortly, but below are the main times when a mortgage offer could be withdrawn.

• Before exchange of contracts - This is the most common time for a mortgage offer to be withdrawn. It usually happens because something was flagged in a secondary check, after you received your mortgage offer. It might delay your house purchase, as you’ll likely have to reapply for a mortgage.
• After exchange of contracts - Offers withdrawn after exchange of contracts usually happen because the offer has expired, and you’ll usually need to reapply for a mortgage. You may lose your deposit and need to pay conveyancing fees.
• On completion day - Mortgage offers being withdrawn on completion day are extremely rare, and tend to only happen when something very big has come to light. In these cases, you may be liable to pay any outstanding fees and need to reapply for a mortgage. The purchase might also be lost if the seller doesn’t want to wait for you.

Why would mortgage lenders withdraw an offer?

There are all sorts of reasons for a mortgage provider to withdraw a mortgage offer. The typical common theme is that, in between receiving the offer and having it withdrawn, circumstances have changed. Here are the main reasons why a mortgage offer might be withdrawn:

• Mortgage offer expires - This is the most common reason for a mortgage offer to be withdrawn. Most mortgage offers are valid for 3-6 months, so if you haven’t completed by then, you may need to ask for an extension or the offer will probably be withdrawn.
• Problems with the property - Aside from an initial valuation, mortgage providers may decide to do further surveys and checks on the property. Structural or environmental issues could make the property be seen as a riskier investment, so they may withdraw their offer.
• Providing false information - If the mortgage provider finds you provided false information, knowingly or not, on your mortgage application, they’ll likely withdraw their mortgage offer.
• Credit checks - If you take out a loan shortly after receiving your mortgage offer, a mortgage provider may question your ability to pay off your mortgage. They can do another credit check whenever they choose, and could withdraw their offer based on this.
• Financial circumstances change - If you find yourself suddenly without a  job, or unable to work, you might need to prove you can still make your monthly payments. Based on this, your mortgage provider might withdraw their offer.
• Suspicious activity - If the property or your bank accounts are flagged as being involved in suspicious activity of any kind, you could have your mortgage offer withdrawn.
• External factors - A significant shift in interest rates, such as in September 2022, can cause mortgage providers to reassess the monthly payments across a lot of mortgage offers, and withdraw them in order to avoid losing money.
  

If you want to learn more about mortgage offers, you can check out our blog ‘How long does a mortgage offer last?’

What do I do if my mortgage lender withdraws their offer?

Having your mortgage offer withdrawn can be scary, and it’s hard to know what to do next. Here are a few steps you can take if your mortgage provider withdraws their offer:

1. Talk to your mortgage provider - It’s important to find out the reason for the mortgage offer being withdrawn, and if there’s anything you can do. For example, if your offer was withdrawn because it expired, you might be able to ask for an extension.
2. Talk to a mortgage advisor - If you’re not already talking to a mortgage advisor, it might be a good idea to find one. They can help you decide on the best steps to take next and help you find a mortgage deal that’ll work moving forward.
3. Talk to the seller - Having your mortgage offer withdrawn might mean you have to back out of your sale, depending on how far along the process you are. Your conveyancing solicitor should take care of talking to the seller to see if they’d be prepared to wait for you.

If you’d like to learn more about mortgage advisors, you can check out our blog ‘What does a mortgage advisor do?’

A few final tips…

Here are the last few things to keep in mind if you’re worried about your mortgage offer being withdrawn:

• Working closely with a solicitor and mortgage advisor will help  keep you up to date with the whole mortgage process
• Knowing all the reasons why a lender can withdraw an offer can help make sure you’re set up for success in your home-buying process

Urban Jungle is not a financial advisor and information in this article should not be taken as advice or recommendation.