Although it’s rare, there are several reasons a lender can cancel a mortgage – including a time limit on how long an offer is valid.
While it’s a position no one wants to find themselves in, the team at Confused.com mortgages have looked at some of the most common reasons a lender may cancel a mortgage.
5 reasons your mortgage could be cancelled
1. The offer has expired: A mortgage offer usually lasts around 6 months. This is usually plenty of time to buy and move into your new home, but not always. Things like construction delays can slow the process beyond the offer end date.
If the property purchase is delayed, the original mortgage offer might expire. The lender may be able to re-offer the same deal, but they’re not required to do so.
2. Property problems: Lenders like to know their money is safe when they lend you money to buy a home. They use property surveys to check there are no issues with the property that may impact their investment.
If the survey reveals a major issue that concerns the lender, they might withdraw their offer.
3. False information and other fraudulent findings: When you apply for a mortgage, lenders check that you’ve provided the correct information. They also check that your deposit comes from legal sources.
If lenders can’t verify the information in your application, they might withdraw their offer. This includes checking bank statements and any other documents that you have provided to prove your stated income.
Signs of suspicious activity, like potential money laundering or fraud, can also lead to a cancellation.
4. Credit complications: Lenders make credit checks before the mortgage offer, but they can also do this after they make you an offer. Your lender may withdraw your offer if any extra checks reveal credit activity, such as undeclared borrowing or a sudden drop in your credit score.
5. Change in circumstances: Any change in circumstance could affect your offer. These often relate to changes in income. Pay cuts, redundancies, or increases in your regular outgoings could have an impact on how much the bank or building society is willing to lend you.
If your lender believes these changes may affect your ability to meet your monthly repayments, they can withdraw your offer. You could have the opportunity to discuss these changes with your lender.