Once you've exchanged contracts with the seller when making a house purchase, it certainly feels like you're on the last stretch towards buying your new home.
However, while it may sound like your worst nightmare, there are rare cases in which mortgage lenders have been known to withdraw offers after this exchange has taken place but before completion.
Before we look at why offers might be withdrawn, it's helpful to understand what a mortgage offer actually is.
A mortgage offer is a formal arrangement with your lender confirming that your application has been accepted and they will release the funds needed to buy your new home upon completion of the purchase.
This is different to an Agreement in Principle, which you can get without going through the full application process. An Agreement in Principle is not a guarantee that your actual mortgage application will be accepted.
Most mortgage offers in the UK are valid for between three and six months, depending on the lender. Some lenders offer longer validity periods for new-build properties, with some offering up to nine months to account for potential construction delays.
In certain cases, a mortgage offer may be withdrawn after exchange of contracts if the lender reassesses your finances and decides against lending to you. This is an incredibly rare situation, as they should have carried out all the relevant checks beforehand, but there is the odd case where something has been missed upon the first look.
The main reasons that a lender may withdraw a mortgage offer are:
Lenders commonly perform a final credit check before releasing the mortgage funds. This typically takes place a few days before completion, or sometimes even on the day of exchange. The lender wants to confirm that nothing has changed since your application was approved. They will check for:
Another reason for your offer being withdrawn is if your house purchase takes many months and the offer actually expires. This is particularly common with new-build properties where construction delays push back completion dates, or when you're in a property chain that stalls.
It's a good idea to note the expiry date in your calendar. If it's approaching, get in touch with your lender as soon as possible to request an extension. Some lenders offer extended validity periods for new-build purchases specifically to protect against construction overruns.
A lender may also withdraw an offer if there's been a sudden change in your circumstances, such as:
Banks and building societies understand that buying a property is a complicated process and that things can sometimes overrun or take longer than anticipated.
If your mortgage offer is approaching its expiry date, you can usually request an extension. You'll typically need to give your lender advance notice – often a few weeks before your offer is set to expire. Speak to your lender as soon as you realise you might need more time.
When applying for an extension, lenders may:
Extensions are typically granted in 30 to 60-day increments, though each lender's policy is different. If you can provide a clear timeline showing when the purchase will complete, this could work in your favour. Speak with your solicitor or conveyancer to understand what the hold-up is and whether it can be resolved.
If you find yourself with no mortgage after you've exchanged contracts, you should try and find a new mortgage as soon as possible. It's best to get in touch with a mortgage adviser or broker to review your options and see if there are any suitable alternatives.
If your offer has been withdrawn or expired, you may need to reapply from scratch. This means:
If you were approved for a mortgage the first time, you may still be able to secure another offer — particularly if the original one expired rather than being withdrawn due to new information.
Keep in mind that the particular mortgage you originally applied for may no longer exist. The interest rate might have changed, or the term might be a different length. You may actually get a better deal when you reapply – but, on the other hand, what you get could be less favourable than your first mortgage offer.
If your offer was withdrawn because the lender reassessed your finances and they didn't match up with their lending policy, you may be able to find another lender that is happy to give you a mortgage.
Be aware that each new application shows up on your credit history. Several applications made close together can put lenders off, as it may signal you’re going through financial difficulties.
Without a mortgage, the sale may fall through.
If your mortgage offer is withdrawn after the contracts are exchanged and you have to back out of the agreement, you'll lose the deposit you paid to secure the deal - typically 10% of the purchase price (though in some cases it may be lower if agreed with the seller).
Once contracts are exchanged, you're legally committed to the purchase, and the deposit is forfeited if you withdraw.
Remember, it's incredibly rare for a lender to withdraw your mortgage application at such a late stage if you have been open with them from the beginning. If it does happen, it's important to keep your cool and try to take hold of the situation as soon as you can.
The quicker you act to find a new mortgage deal if problems arise, the better.
Disclaimer: We make every effort to ensure content is correct when published. Information on this website doesn't constitute financial advice, and we aren't responsible for the content of any external sites.
Fiona is a personal finance writer with over 7 years’ experience writing for a broad range of industries before joining Ocean in 2021. She uses her wealth of experience to turn the overwhelming aspects of finance into articles that are easy to understand.
