CAN A MORTGAGE
OFFER BE WITHDRAWN?

WITH A CRASH IN THE VALUE OF THE BRITISH POUND STERLING
MANY MORTGAGE DEALS HAVE NOW BEEN PULLED FROM THE MARKET

FIND OUT HOW THIS MAY IMPACT YOUR MORTGAGE OFFER

CAN A MORTGAGE<br>OFFER BE WITHDRAWN?
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Can a mortgage offer be withdrawn?

Getting a mortgage can be a long process in many cases. Once a mortgage in principle has been confirmed, buyers will be eager to get their purchase underway and completed.

With the UK’s current financial climate, buyers may be extremely worried as to how this will affect their new mortgage deals. There could be concerns as to whether lenders may withdraw their offer of a mortgage because of the unstable housing market and the British pound’s drop in value.

With interest rates predicted to jump to as high as 6%, nearly 300 UK mortgage deals have been withdrawn within a 24 hour period from lenders including HSBC, Halifax and Santander.*

If your chosen lender was to withdraw their offer, there are ways in which we can help.

On this page we will discuss what happens if a lender withdraws their offer and what your next steps are in this situation.

Mortgage offer withdrawn after exchange

The answer to whether a mortgage offer can be withdrawn after exchanging contracts is yes. As frustrating as this can be, a lender will still be able to change their mind about offering a loan at any point after the offer is issued. This will apply until the purchase is fully completed.

After last week’s mini budget announcement and the ensuing impact on the economy, several mortgage providers have adjusted deals or completely pulled new mortgage offers. This will be so they can review pricing in line with the rise in inflation and interest rates.

Usually, lenders will only withdraw existing offers for very serious reasons, such as finding out you have lied on your application.

But with the crash of the British Pound and a cost of living crisis in full swing, lenders will now be more cautious than ever about offering loans – particularly if the borrower has a history of poor credit or debt.

This will be bad news to buyers who had managed to find great deals with reasonable rates to suit their budget. First time buyers and those looking to remortgage will likely now face much higher prices than previously expected.

If concerned your mortgage will be affected or your offer has already been pulled, speak to a specialist broker for further advice.

Although this situation may be worrying, we can assure you we will be able to help you find a new deal that is just as good, if not better than the previous one.

Can a mortgage offer be withdrawn after completion?

If you have already taken ownership of the property and fully completed the purchase, a lender should not be able to withdraw the mortgage at this point.

This is good news for anyone who has recently finalised their purchase, as they have managed to avoid the possibility of losing their offer. However, there may still be effects on your mortgage relating to the current cost of living crisis.

Increasing inflation has pushed interest rates higher and higher over this last year. This will have affected anyone who has a variable rate mortgage in place, whether this has been for years or recently arranged.

Anyone who has only just completed a property purchase may understandably be reluctant to want the hassle of adjusting their deal already. However, those who have had a mortgage in place longer and have seen price increase after increase may benefit from considering a remortgage to a fixed rate.

A fixed interest rate mortgage will ensure consistent pricing month on month, without the worry of potential sudden increases in cost.

With 2, 5 or 10 year deals being commonplace, any of these options will allow you peace of mind knowing you have the ability for financial planning, without the UK recession causing your monthly repayments to become more and more expensive.

For more information on fixed rate mortgages CLICK HERE.

For our guide to how long to fix your mortgage rate for CLICK HERE.

Mortgage offer withdrawn on day of completion

There has been chaos in the UK housing market this week, with many mortgage deals being pulled from market by lenders.

On Tuesday, HSBC decided to temporarily withdraw all its business and buy to let deals from availability to new applicants – and other lenders are likely to follow suit in reducing the range of mortgage deals they are willing to offer.

If you have a current mortgage offer you may be safe from this process, but this will depend completely on the lender you are with. In very rare cases, a mortgage lender may be able to withdraw their offer even on the day of completion.

Additional costs and fees are likely to be charged if having to pull out of your purchase so late, so it is worth consulting a solicitor for advice if this has happened to you.

It is however extremely unlikely for a lender to pull an offer this far into the process unless they have been made aware of a major issue with the application.

What should I do if my mortgage offer has been pulled?

If you have been affected by a mortgage offer being withdrawn, it doesn’t mean you will struggle to find another deal elsewhere. It is best to consult with a specialist and assess your next steps before making any hasty decisions.

Although the current economic crisis may have caused a withdrawal, there are other reasons a lender could choose to pull their loan offer.

The other reasons a lender may have chosen to withdraw their offer include:

  • Fraudulent information supplied on the application
  • New credit issues
  • The offer has expired
  • Errors in the application
  • Sudden change of circumstances e.g. loss of job

If affected by any of the above, speak to one of our mortgage experts. We will be able to provide you with as much advice and support as needed and can help you to put a great new deal in place.

*according to The Guardian

Useful resources

Bank of England – Official Bank Rate history

Bank of England – Bank Rate increased to 2.25% – September 2022

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