Can a mortgage offer be withdrawn on the day of completion?
It is very rare that a mortgage lender will withdraw a mortgage offer on the day of completion although mortgage lenders can decline you a mortgage after an agreement in principle, after a mortgage valuation and even withdraw your mortgage after the exchange of contracts but usually mortgage lenders will have found and spotted any issues which require a mortgage offer withdrawal before the day of completion.
However unlikely it is for a mortgage lender to withdraw your mortgage offer on the day of completion, it is possible and they are within their rights to do so.
If your mortgage lender withdraws its offer on the day of completion you should seek legal advice from your conveyancer as you will likely have already incurred sunk costs which you cannot get refunded but this will be based more on your contract with the seller.
Some of the costs a mortgage offer which is withdrawn on completion day may put at loss include:
- Your mortgage deposit
- Your property reservation fee
- Your mortgage application fee
- Your conveyancing fee
- Your property valuation fee
Some of the reasons why a mortgage offer could withdraw your offer on the day of completion include:
- The mortgage lender is made aware of a change of circumstances since it gave you the mortgage offer. This could be a change in the properties value, a change in your mortgage affordability, a change in your credit score etc.
- The mortgage lender is made aware of an ongoing fraud in regards to your mortgage application
- The mortgage lender could be restricted from offering this product by the FCA.
- The mortgage lender may have stopped offering this product.
- Your mortgage offer may have just expired.
- The mortgage lenders lending requirements may have just changed e.g the Loan to value offered or a change in the Bank of England base interest rate which affects the mortgage lenders interest rates on some of its products.
- The mortgage lender may have made an error.
Most mortgage lenders do last minute checks before completion but if your circumstances haven't changed since you got your mortgage offer then it is unlikely your mortgage will be withdrawn on the day of completion.
If your mortgage offer is withdrawn then a mortgage broker will be able to assess your situation and propose suitable mortgage lenders that may be willing to lend to you after getting an understanding of why the mortgage offer was withdrawn on the day of completion.
Can a mortgage be withdrawn after completion?
No, A mortgage offer cannot be withdrawn after completion but if there may be any reason why it should, such as your circumstance changing then you should inform your mortgage lender immediately so that they can find ways to accommodate you to ensure you don't miss your monthly mortgage repayments and ruin your credit score.
These ways could be:
Increasing your mortgage term to reduce your monthly mortgage repayments:
This method will, however, increase the amount of interest you would pay in contrast to what will have been stated on your key facts illustration document when you got the mortgage offer. This is because the capital you owe on your mortgage will now be owed for a longer time frame and hence you will be charged interest on it for a longer time frame than first agreed with the mortgage lender.
Offer a mortgage repayment holiday:
A mortgage repayment holiday essentially means a break from making your monthly mortgage repayments. Your mortgage lender will offer you a break of a few months and maybe even up to a year to stop making your mortgage repayments but you will then need to make increased mortgage repayments when your repayments resume.
You will also incur more interest than stated on your key facts illustration document when you got the mortgage offer as you now owe more capital after your repayment holiday finishes than you would have at the same point if you had not taken a mortgage repayment holiday.
Offer reduced monthly mortgage repayments:
Your mortgage lender could also offer you to make reduced monthly repayments than what will have been stated on your key facts illustration document when you got the mortgage offer. As with the above cases, you will now be paying more mortgage interest when your reduce monthly mortgage repayment term ends as you will now owe more capital to the mortgage lender at that time than you originally would have owed.