See how we can help

Get started online

Mortgage Withdrawn After Exchange

Written By:
Myles Robinson - Expert Finance Advisor

Posted: Nov 7, 2022

Mortgage Withdrawn After Exchange

An unfortunate reality of purchasing property with a mortgage is that the mortgage offer can be withdrawn at any stage of the process – even after funds have been released – and there are a number of things that can cause this, such as changes in circumstances, problems with the property, or suspected fraud.

We’ve outlined all you need to know about mortgages and what to do if the offer is withdrawn after you’ve exchanged contracts.

Use our online mortgage calculator as a guide for your monthly repayments now

We are expert mortgage brokers

We have access to over 200 lenders in the UK to get you the best rates

/” buttontext=”Get your Quote” >]

What Is A Mortgage?

A mortgage is a type of loan used to purchase a property and you get a mortgage from either a building society or a bank. A mortgage requires surety, which means that the lender can take the property back if you default on payments which ensures that the lender doesn’t lose money should you not be able to afford the repayments anymore.


How Does A Mortgage Work?

A mortgage works in a very similar way to any standard loan. Once your receive the mortgage, you will make monthly repayments to the bank or building society. These repayments will include interest. The repayment period is usually 25 years, although it can be shorter or longer depending on your contract and the lending institution.

Your property acts as surety for the mortgage loan, which means that the bank can repossess the property if you default on any payments. Once the mortgage is fully paid off, you’ll be the sole owner of the property.

It is possible to get a mortgage both as an individual or as a group when applying for one in the UK.

Mortgage Loan vs Standard Loan: What’s the difference?

While a mortgage is a type of loan, it doesn’t work in exactly the same way as your standard loans.

The main difference between a standard loan and a mortgage is that a mortgage is secured. This means that it requires collateral – generally, the property that is purchased with the mortgage is used as collateral in this instance.

The interest rate for a mortgage will often be lower than that of a standard, unsecured loan, as the latter is a higher risk for the lender.

Get started online


What Is A Mortgage Offer?

Once you have completed your mortgage application and have passed all the credit checks and other checks, you’ll receive a mortgage offer. It is essentially a confirmation of approval, and the offer is valid for three to six months. A mortgage offer allows you to move forward with a property purchase.

Mortgage offer vs Mortgage in principle

When looking to purchase a property with a mortgage, you will likely come across two different terms. One being a mortgage offer and the other a mortgage-in-principle.

A mortgage-in-principle is a useful thing to have when looking for a home. It is essentially a statement from your bank or lender stating how much they would be willing to lend you for the purchase of a property. The amount is determined by your current financial situation.

This option shows sellers and estate agents that you are serious about finding a property to purchase and also gives you an idea regarding what you’ll be able to afford. It is important to remember that this amount is not guaranteed and that the only set amount is the amount your receive with the mortgage offer.


Why Would A Mortgage Offer Be Withdrawn After Exchange?

It is unusual for a mortgage offer to be withdrawn without a valid reason. Often, the offer is withdrawn due to changes of circumstances with the buyer, a credit check failure, suspicion of fraud, or some other breach of the contract terms.

The most common reasons for withdrawal are listed below.

The offer has expired

Mortgage offers are only valid for a limited period of time, often three to six months. If the offer has expired before completion, then the offer will have to be withdrawn, and you’ll need to reapply.

If you have not been informed about the offer’s validity period, or if there are delays in the process, be sure to speak to your broker to get clarity and potentially increase the validity period. If you give sufficient notice and have valid reasons for requesting an extension, you’ll likely be granted one by your lender.

Your circumstances have changed

A withdrawal can happen if there is a significant change in your circumstances. For example, if you have lost your job or your expenses have had a dramatic increase, your lender may decide that you are no longer eligible for the mortgage offer. Alternatively, they may choose to adjust the mortgage offer or its terms.

It is always important to keep your lender informed of any changes in your circumstances. If you are concerned that you won’t be able to afford your repayments, make contact with your lender to come up with an updated payment plan rather than waiting until you default on a payment.

Be honest with yourself about your circumstances and what you can afford. You want to avoid entering into a mortgage agreement that you can’t actually afford.

There is suspicious activity around your application

If you’ve entered information incorrectly, or there are other signs of potential fraud in your application, the lender will likely withdraw the offer in order to protect themselves from unwittingly entering into fraudulent activity.

If the information has been filled in incorrectly by accident, you’ll need to contact the lender and restart the process. This is a good example of why you need to triple-check any forms before submitting them.

There are issues with your credit checks

Mortgage brokers need to perform various thorough credit checks before they can approve any mortgage offers. When reviewing your finances, they may find a reason to run a secondary credit check after approving your mortgage.

This can be triggered by a change in circumstances, so be sure to inform your mortgage lenders of any changes timeously in order to prevent delays in the process. Discovering that there is incorrect information regarding your finances could make your lender withdraw their offer, as could failing a credit check.

Problems come to light at the property you’re purchasing

If issues arise during the conveyancing and surveying processes that affect the property’s value, your lender may decide that the investment is too risky and choose to withdraw the mortgage offer.

An alternative to having the mortgage offer withdrawn is receiving an amendment of the contract or terms of the mortgage agreement from the mortgage provider.

If this happens, make sure that you know exactly what the issues are and that you’ve read the contract amendments carefully – you want to avoid investing in a property that has too many problems or entering into a contract that has negative implications for your future.

Get started online


Mortgage Offer Withdrawn After Exchange? Here’s What To Do

If you’ve had a lender withdraw a mortgage offer before completion, you’ll likely feel concerned about any future possibilities of securing a mortgage. The good news is that you don’t need to worry. Not only can mortgage applications be revived, but being declined for a mortgage isn’t the end of your property-purchasing dreams.

Here are the best steps you can take to recover from an offer withdrawal and hopefully revive the mortgage application.

  1. Take a few deep breaths: Avoid rushing into a new application. If you apply for another mortgage too quickly after the withdrawal and receive an additional rejection, you may negatively impact your credit score. This can, in turn, negatively influence your future chances of mortgage approval.
  2. Consult a mortgage advisor: If you had already exchanged contracts before the mortgage was rejected, it is important to consult with a mortgage advisor to find the best possible route forward. They will be able to assist with either appealing the decision of the lender or finding a better deal with a different broker.
  3. Trust the experts: Once you’ve linked up with a mortgage advisor, you’ll need to let them get the work done on your behalf. Use this time to take a breather and destress, if possible. The advisor has your best interests at heart, so they will negotiate well on your behalf and ensure that you’re getting the best possible offer.

It is important to remember that timing is crucial when a mortgage offer is withdrawn. Be sure to contact a mortgage advisor quickly in order to get the best possible outcome.


When Can Mortgage Lenders Withdraw Offers Legally?

A mortgage lender can withdraw a mortgage offer at any stage of the process, even after contracts have been exchanged. However, the lender must have a good reason for the withdrawal of the offer.

If they don’t give a good reason for the withdrawal, it is worth fighting the decision. You can do this by employing a mortgage advisor – they’ll be able to renegotiate the contract on your behalf or find a better option with a new lender.

To avoid your mortgage offer from being withdrawn, it is important that you follow the process for the mortgage application carefully and ensure that there are no errors on your application. You should also remember to notify your lender if your personal circumstances change so that they can adjust the offer accordingly if needed.

Get started online



Can a mortgage lender decline your offer after the exchange of contracts?

Yes, mortgage lenders reserve the right to decline a mortgage offer after a contract exchange has occurred. At any point in the purchasing process, mortgage lenders are allowed to withdraw their offer, provided there is a good reason for it.

Some of the reasons that can make a mortgage lender withdraw the offer are as follows:

  • Failing a credit check
  • Suspicion of fraud or foul play
  • Undisclosed change in personal circumstances
  • Issues affecting the value of the property

Can a buyer pull out after the contract exchange?

The buyer can pull out of the sale after the exchange of contracts. However, there will be legal and financial punishments that come with this decision. You will need to pay interest, as well as the seller’s legal fees and any contractual penalties.

Does the mortgage lender do an additional credit check between exchange and closing?

There is a chance that your lender may perform an additional credit check after the exchange of contracts. They will only do so if they have reason to suspect a change in your personal circumstances. If they decide to check again, they’ll likely do a deep dive credit check to make sure that all is well.

Alternatively, a complex mortgage contract or application can require further checks after the exchange of contracts. This will happen if the lender finds cause for extra scrutiny after completing their underwriting process.

Final Thoughts

While it can be stressful and disheartening when a mortgage offer is withdrawn, there are ways to revive the application, and it doesn’t mean the end of your property purchase journey.

The best way to prevent a withdrawal is to make sure that you fill in the forms accurately and keep your lender up to date about any changes in circumstances that occur during the process.

Get started online