Can My Mortgage Offer Be Withdrawn?
Posted on 25th March 2020
Whether you have an agreement in principle, a formal mortgage offer, or have Exchanged Contracts on your property purchase, your mortgage lender, at all times, can reserve the right to withdraw their offer to lend you funds. In this blog, our Preston solicitors explain why, and in what circumstances.
One thing that appears to be somewhat ill-fitting and, at times, hard for clients of the firm to understand, is that your property solicitor has a duty not only to you, as a valued client, but to your mortgage lender, where applicable.
It is, therefore, important that you remain open and honest with your conveyancing solicitor as, in certain circumstances, particular issues are required to be reported to your lender. Whilst rare, in such situations where your mortgage lender is not satisfied, they can reserve the right to withdraw the mortgage offer, even where Contracts have been formally Exchanged.
Within the offer of loan your lender provides, there is usually a section which advises of the circumstances in which the offer may be withdrawn.
These usually relate to the following, as examples:
- A change to the facts on which the offer has been issued:
In instances where information materially changes the facts provided to the lender, in connection with the application for the mortgage itself, the lender may wish to reconsider their decision to lend. This would include a change in your personal circumstances, for example, that may substantially affect your ability to afford the monthly repayments. This is not to say that the lender may withdraw their offer completely, they may, however, decide to amend the amount they decide to lend you, or amend the terms of the offer. This is, of course, at their discretion based on the information you provide. It is, therefore, imperative that the lender is informed of any such changes that may affect the offer they issue you with.
- Suspicious activity:
Where there is a suspicion of property fraud, or where the lender believes that incorrect and/or fraudulent information has been intentionally provided in order to secure the loan, they may withdraw the offer. This is to protect themselves being party to any fraudulent activity that may adversely affect their interest in a property. We do not mention this to cause alarm, and, to date, at least, our property solicitors have not had to report any activity that is not deemed bona-fide.
- The mortgage offer has simply expired:
Mortgage offers, as standard, last for a period of six months, however, this can vary lender-to-lender. This is something that you should be mindful of, particularly when purchasing a new build property that may not be structurally ready and fit for occupation for another year. In such cases, it is imperative that you advise your lender and mortgage broker of the same from the outset. Your solicitors in Preston may apply to the lender for an extension of time on the offer, however, there is no guarantee that the same will be granted and, in such instances, evidence would be required to confirm that Exchange and/or Completion of the matter was imminent, or to provide a suitable alternative explanation. Whilst this is your duty to comply with, our solicitors in Preston can assist to ensure that your offer does not expire before Completion of your purchase.
- Issues arising with the property:
Where there has been an issue brought to light, which may significantly affect the value of the property on which the mortgage offer has been based, and which may propose to compromise the lender’s security over the property, the offer may also be withdrawn.
For example, your conveyancing solicitor carries out searches on the property you intend to purchase. The results, when received, reveal a high risk of flooding occurring at the property. As this risk may potentially influence the security of the property and, as such, the lender’s interest, your property solicitor is required to report this risk to your mortgage lender. The lender then has the opportunity to review the search result themselves and make a decision as to whether they are still agreeable to lending the funds. In the event that the lender was not satisfied, the offer may be withdrawn.
When the time comes, your conveyancing solicitor is to submit a certificate of title to your lender, to request that funds be drawn down for completion. In submitting the certificate, there is a section for your Preston solicitor to confirm that they have adequately investigated the property and are satisfied that, on Completion, both you and the lender will have a good marketable title to the property. Evidently, where issues have arisen throughout the conveyance, the lender is to be appropriately advised. It is important to note that the withdrawing of the offer in full is rare, however, where a potential issue is revealed, the same must be reported accordingly.
The above are, in no way, placed to impose uncertainty upon our valued purchaser clients, they are simply to advise of the obligations to the mortgage lender and, as prudent purchasers, allow for an added layer of protection. As discussed, the withdrawing of the offer is, in fact, very rare but, nevertheless, something you should be mindful of. Our solicitors in Preston are, therefore, on hand to assist in guiding you through the process smoothly.
The main concern of the mortgage lender is that, in return for agreeing to lend the mortgage funds, their security over the property is going to be adequately protected. It is, therefore, not only your job to advise them of any issues, but also that of your property solicitor.
MG Legal – Your Local Solicitors
Tagged as: Conveyancing Solicitors Lancaster, Longridge Solicitors, Preston Property Law, Your Local Solicitors
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