Having a mortgage application withdrawn after contracts have been exchanged is quite rare, but it can happen occasionally, and when it does it can be very distressing for buyers who were just inches away from owning their own home. In this guide we’ll be exploring the reasons why a mortgage might be withdrawn after exchange of contracts and the steps you can take after that to get back on track.
Why might a mortgage be withdrawn after exchange?
A bank or mortgage lender can withdraw the offer of a mortgage after exchange of contracts has taken place. They have the right to decline an application at any point prior to completion, if they have a good reason to do so. The most common reasons a mortgage might be withdrawn after exchange are set out are explained below:
Bad credit has been discovered late into the process
Bad credit would normally be researched and highlighted long before the moment of exchange, but some lenders will complete a final credit check before completion. This may be because they have reason to suspect that your credit report has changed since the start of the process, or if you application is more complicated and needs extra investigation by the lender’s underwriting team. If the bad credit found after the exchange is determined as too severe, it is likely that the lender will withdraw your mortgage application before completion.
Your affordability has changed
If your mortgage lender has reason to believe your financial situation could change, they are within their rights to reassess your application after exchange. If your income has decreased or your outgoings have substantially risen since you submitted your application for a mortgage, they could withdraw their offer completely, or adjust the amount they would be willing to lend to you.
The lender believes there to be foul play
If there is evidence of potential fraud, money laundering, or any other form of financial misconduct, mortgage lenders can legally withdraw a mortgage application at any time.
A mistake on your application
A basic error on your application paperwork can derail the possibility of getting a mortgage at any time during the process, even after exchange of contracts. This could be something as small as an address spelt incorrectly or outdated proof of income. It is always important to double, and triple check all the information on your paperwork.
What should you do if your mortgage is withdrawn after exchange?
The first thing to remember if your mortgage is withdrawn is you don’t need to panic, there will be other options. It’s natural to feel stressed if you’ve had a mortgage declined before completion, but it is possible to revive an application that has been halted after contract exchange. Following the steps below can help give yourself the best chance of getting your application back on track.
- Don’t rush into another application – take and breath and don’t jump into another application with a different lender straight away. Another rejection at this point could affect your credit report and jeopardise the chance of securing a mortgage in the near future.
- Get the right advice from a professional – you will require specialist advice from a mortgage broker or property solicitors if you reached the point of exchanging contracts before being declined. Having the right person fighting your corner will give you the best possible chance of appealing your lender’s decision or finding a better deal with another mortgage provider.
- Be strategic and don’t let your emotions take over – timing is essential when you have had a mortgage offer retracted after contract exchange, so it’s advisable to speak to an expert straight away.
Who can you speak to?
If your mortgage has been withdrawn after exchange and you need help, contact our expert team of property solicitors Whitley Bay at Toomey Legal today. We have the knowledge, skills, and experience to help you get the best outcome and ensure one way or another you can purchase your perfect home.