Receiving your mortgage offer is an important step in the home buying process, as it means that a lender has formally agreed to lend you the money you need.
But what happens if your mortgage offer is suddenly withdrawn?
Can a mortgage offer be withdrawn, and if so, what are the reasons behind it? In this article, we’ll explore the possibility of a mortgage offer being withdrawn and what you can do to prevent it from happening.
Mortgage Offers Explained
A mortgage offer is a formal written agreement from a lender to lend you a specific amount of money against a specific property.
It applies to both purchases and remortgages.
This offer is usually valid for a set period, typically between three to six months, and outlines the terms and conditions of the loan, including the interest rate, repayment schedule, and any fees or charges.
To receive a mortgage offer, you must first go through the mortgage application process, which involves providing personal and financial information to the lender. The lender will then assess your application and determine if you are eligible for a mortgage and how much they are willing to lend you.
This is the underwriting phase.
Once you receive a mortgage offer, you can proceed with the home buying process, secure in the knowledge that you have the necessary funds to purchase your new home.
Reasons for a Mortgage Offer Being Withdrawn
While a mortgage offer is a legally binding agreement, there are certain circumstances in which a lender may withdraw their offer.
These include:
Changes in Your Financial Situation
One of the most common reasons for a mortgage offer being withdrawn is a change in your financial situation. If you have taken on new debt, lost your job, or experienced a significant drop in your credit score, the lender may reassess your application and decide to withdraw their offer.
It’s essential to keep your lender informed of any changes in your financial situation, as failing to do so could result in your mortgage offer being withdrawn.
Changes in the Property
Another reason for a mortgage offer being withdrawn is changes in the property you are purchasing. If the property’s value decreases significantly, or if there are any issues with the property’s title or survey, the lender may decide to withdraw their offer.
It’s crucial to have a thorough property survey done before applying for a mortgage to avoid any surprises that could lead to your mortgage offer being withdrawn.
Failure to Meet Conditions
Most mortgage offers come with conditions that must be met before the offer becomes final. These conditions may include providing additional documentation, making repairs to the property, or paying off certain debts.
If you fail to meet these conditions within the specified timeframe, the lender may withdraw their offer.
Fraud or Misrepresentation
Lenders take mortgage fraud very seriously, and if they discover that you have misrepresented any information on your application, they may withdraw their offer.
It’s important to be honest and transparent when applying for a mortgage to avoid any issues later on.
How to Prevent Your Mortgage Offer from Being Withdrawn
While there are circumstances in which a mortgage offer may be withdrawn, there are steps you can take to prevent this from happening.
These include:
Working with a Mortgage Broker
A mortgage broker can help you find the best mortgage rates and terms for your specific financial situation. They can also guide you through the application process and ensure that you meet all the necessary conditions to prevent your mortgage offer from being withdrawn.
Being Honest and Transparent
As mentioned earlier, honesty is crucial when applying for a mortgage. Be sure to provide accurate and up-to-date information on your application to avoid any issues with your mortgage offer.
Keeping Your Lender Informed
If there are any changes in your financial situation or the property you are purchasing, be sure to inform your lender immediately. This will allow them to reassess your application and make any necessary adjustments.
Meeting All Conditions
When you receive your mortgage offer, be sure to read through all the conditions carefully and make a plan to meet them within the specified timeframe.
What to Do If Your Mortgage Offer Is Withdrawn
If your mortgage offer is withdrawn, it can be a stressful and frustrating experience.
However, there are steps you can take to rectify the situation, including:
Contact your broker
The first thing you should do is contact your mortgage broker.
They will probably already know that the offer has been withdrawn. Your broker can speak with the lender to find out exactly what has happened.
New mortgage offer
If the lender receives the information or paperwork they need then it’s possible that a new offer can be issued. However, this may be on slightly different terms, depending on the amount of time that has passed.
Reapplying for a new mortgage
If your mortgage offer is withdrawn, you may still be able to secure a mortgage from another lender. However, keep in mind that this is likely to delay the home buying process and you will incur further fees.
It is unusual for a mortgage offer to be cancelled, once it has been issued.
But if this does happen to you it’s important not to panic and to contact your broker as soon as possible. They will be able to help you fix the situation.
It is very common for lenders to carry out another credit check between issuing the mortgage offer and completion of the mortgage.
This is to pick up on any changes since you first applied.
Taking out further credit or falling behind with your commitments could give them a reason to cancel your mortgage.
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Sean Horton is a co-owner of Drake Mortgages and has worked in financial services, mortgages and insurance since 1988. Previously a financial adviser and a mortgage broker, he regularly writes about mortgages, bridging loans and commercial finance.
