A change of circumstances can occur after you have received a mortgage offer. This isn't necessarily a bad thing but you do have an obligation to declare the change of circumstance to your mortgage lender if not you could be committing fraud by way of misrepresentation.
Once a mortgage lender gives you an offer they will usually begin to look more in-depth into the information you have supplied with your mortgage application. This means they will be looking to revalidate all the information which you used to gain the mortgage offer in the first instance.
If any of this information can’t be revalidated, e.g you are asked to supply a letter from your employer and you cant as you just got fired last week then rightfully so, your mortgage application will be rejected due to the change of circumstances.
This is why it is very important to declare any change of circumstances after a mortgage offer.
A mortgage lender has a right to withdraw a mortgage offer at any time before completion and if your circumstances have changed then they are more likely to withdraw their mortgage offer if they cannot find another product that matches your new change in circumstances.
What is a mortgage offer?
A mortgage offer is given to you by the mortgage lender after you make a full mortgage application. You will receive a key facts illustration document from the mortgage lender informing you about the product it has offered you. A mortgage offer is also known as an “offer of advance”. It should not be confused with a mortgage in principle or agreement in principle as these are simply an indication given by the mortgage lender before you make a full mortgage application for a mortgage offer.
What could a change of circumstance be after a mortgage offer?
You could lose your job and be made redundant. This, of course, means you will likely fail the mortgage lenders affordability tests and you will likely not be able to make your mortgage repayments as you would have originally been able to when you had your job. This is a big change in circumstance and if it occurs after you get a mortgage offer then you should definitely declare this to your mortgage broker and mortgage lender.
You have a new job after your mortgage offer was given and this new job pays less or more. You should still notify the mortgage lender of this as it can be deemed a change in circumstance. Your new job may follow a different employment route e.g contracting and the mortgage lender may not be willing to lend to people who have jobs on fixed contracts.
You could discover that the property you got a mortgage offer for will not be ready for an extended period of time. This could be the case if you bought a property off plan and the problem here is that the mortgage offer, as most mortgage offers, will likely expire within 3 to 6 months. This change of circumstance isn't the worse one to have but you should certainly inform the mortgage lender as they may be able to make some accommodations to avoid the mortgage offer expiring and for you to then need to submit another mortgage application.
How could a change of circumstances affect your mortgage offer?
A change in circumstances could affect your eligibility for the mortgage lenders product as you could become ineligible. This could be the case if:
- Your income falls
- The property is found to be overvalued
- You have new negative marks on your credit report such as a bankruptcy, a CCJ or a default.
A change in circumstances after a mortgage offer isn't the end of the world.
In fact, your mortgage broker may be able to find you a new mortgage lender who will lend to you based on the change of circumstance.
There are a lot of non-high street mortgage lenders who may be willing to consider borrowers with bad credit, complex incomes etc.
If your credit score is low, your first priority should always be to build credit and improve your mortgage affordability, not just for the sake of a mortgage offer but in the future when you may want to remortgage on to a better mortgage deal.