Whay was my mortgage offer withdrawn?
There are many reasons why a mortgage offer may be withdrawn. It is important to know that a mortgage offer could be declined after your mortgage valuation and even after an agreement in principle has been given.
A lot of people have had their mortgage offers withdrawn and still gone on to get a mortgage. Don't panic if your mortgage offer is withdrawn but you may wish to seek suitable advice from a mortgage broker who may be able to assist you further.
So why will a mortgage offer be withdrawn?
Below is a list of reasons why a mortgage lender would withdraw their mortgage offer.
You failed further credit checks
When a mortgage lender gives you an agreement in principle they rarely do a hard credit check and this means they will usually only see your basic credit profile as they would only have done a soft credit check. Your mortgage offer could be withdrawn of the mortgage lender finds much more disturbing things after giving you the mortgage offer.
When a lender then goes to give you a formal mortgage offer they will do a hard credit check and provide you with an offer but in some rare cases, the checks they do are automated and do not look in-depth into your credit profile to fully understand what's going on.
A mortgage underwriter will usually look into your credit file and begin to probe certain things. E.g A mortgage underwriter may find that you were on a debt management plan as you were paying back some of your credit agreements under what should have been your contractual minimum repayment or they could find that you had taken out a payday loan from a new payday lender which the automated credit checking system didn't recognize as a payday lender.
These reasons could be enough for the mortgage lender to decide that you are not someone they which to lend to and hence a good reason why a mortgage offer would be withdrawn.
Don't be too worried about this, there are mortgage lenders who accept borrowers with bad credit. A bad credit mortgage broker may be able to find a mortgage lender who will be willing to lend to you.
Your property is overpriced
After a mortgage offer has been given to you. A mortgage lender will then carry on further checks on the property. One of these checks is a property valuation.
Mortgage lenders may use different forms of valuations and usually when a remortgage is being carried out on a property the mortgage lender will choose to do a desktop valuation.
With this valuation, the mortgage lender will simply input the property details on a database and get a valuation.
On some rare occasions, this valuation may not be sufficient enough and the mortgage lender may have to instruct an in-person valuation at your cost.
In person, mortgage valuations could cause a mortgage offer to be withdrawn as the property valuation may come back at significantly lower than what you are paying for it.
Because mortgage lenders will only lend to you on the true value of your home you will then be required to fund the deficit with your mortgage deposit in order for the mortgage lender to retain their loan to value rate which they offered you initially.
If you cannot find more funds to cover the deficit then your mortgage offer could be withdrawn.
You may be able to challenge the mortgage lenders valuation and prevent them from withdrawing your mortgage offer by paying for an independent valuation from a RICS suveyor and presenting this to them.
Some of these government schemes include:
- Lifetime ISA- gives you a government bonus of £1,000 if you save the maximum £4,000 a year.
- Help to buy ISA- gives a maximum bonus us £3,000 if you save the maximum allowed of £12,000. Before you get either you should consider which is better. Lifetime ISA vs Help to buy ISA.
- Help to buy equity loan- gives you up to 40% as a 5-year interest-free equity loan. You begin to pay interest at 1.75 % after the fifth year and 1% plus RPI for every year thereafter.
- Shared ownership- You can buy between 25% to 75% of the property initially with a shared ownership mortgage and then buy more using a staircasing mortgage.
- Armed forces help to buy- similar to the help to buy equity loan but specific for the armed forces personnel giving them an increased chance of acceptance.
- Rent to buy- This is the right to buy scheme on which this guide is currently discussing. A different marketing name is just used. Watch out for this when shopping to avoid missing out on eligible properties due to confusion.
- Right to buy- allows you to buy your home at a discount price.
- Preserved right to buy- same as above.
- Right to acquire- same as above.
The mortgage offer expired
Your mortgage offer could be withdrawn if you failed to complete on your home purchase in time.
Some mortgage offers may be valid for 6 months and others could be valued up to 12 months as some specialist new build mortgage lenders do.
If you have a mortgage broker they may be able to assist you in finding a mortgage lender to accommodate your needs.
You failed fraud and anti-money laundering checks
A mortgage lender could make you a mortgage offer and later learn that you failed their fraud, anti-money laundering checks or that you are on a sanctions list.
In this case, your mortgage offer will be withdrawn.