Mortgage offer withdrawn after exchange, can I still complete next week?

[Miffed1233]

Exchanged contracts Thursday for completion next Friday. Buyer below me and I’m buying ex rental which is at top of chain

randomly bank withdraw offer Friday afternoon, 24 hrs after exchanging)saying credit rating changed therefore affordability impacted. Have a call at 9am Saturday. Wtf absolutely nothing I can think of that would have changed and my Experian score is very strong still. Any advice - is there any way I can still complete in 6 days?!

any solicitors or bankers on here?

Solicitor here
Hard to say until you have spoken to them but the only way I can see it completing next week is if they have made a mistake and will reinstate your offer,or if they re offer on different terms ie lower mortgage and you can still afford the house
Otherwise you will have to apply to a different lender and that will take weeks

Surely your solicitor should not have exchanged contracts before checking that your mortgage offer was fully confirmed?
I don't see why it would take weeks to find an alternative lender, my DC got an agreement in principle within seconds on line.

An agreement in principle is not a full and formal mortgage offer and therefore you cannot do this.

I know an AIP is not a full offer but a solicitor deals with the lender direct and should not exchange contracts if they have not made sure the mortgage monies will be forthcoming. Likewise a lender cannot really withdraw an offer after exchange of contracts as costs and liabilities will have been incurred by various parties.

And when they exchanged, the money was ready. Now it isnt. I don't really know what you are missing about that?

Indeed. It wasn’t an AIP. . Full offer was received some months ago - solicitor should have applied for funds and as far as we know probably did so after exchange on Thursday or Friday

It's obvious that a lender cannot withdraw willy nilly after exchange, having confirmed to the solicitor that all criteria for the mortgage advance have been met.

Well that is what they did! Just an email at 15:00 saying offer withdrawn based on a drop in credit score - Theo irony is very same bank increased my cc limit a few weeks ago! I can think of literally nothing that has changed. I’ve not even used the credit card to buy things for the new house yet

Well your solicitor is probably liable. They should not exchange until they are sure of the sources of funds. Hoping it will just be a weird admin error. Your solicitor needs to speak to the lender and explain that they have already exchanged. It is not good business practice to withdraw funds if parties have exchanged contracts. Doing so jeopardises the whole process which is hard enough up to the point of exchange when we should all be able to relax.

They are seperate legal events, you are buying a house, and you seperately to this are borrowing money. They are not legally connected that way. If you go ahead and take the money, the lender has conditions that it is to be used for the house only. And if you go ahead and buy the house the seller has to paid once you reach a certain point (or are responsible for costs, lose deposits etc). But the lender isn't bound to giving you the money under any other terms than the ones you agree to with them, which will say any changes can have the offer withdrawn. They aren't bound to a house sale, only to those terms between you and them.

Unless something reasonably substantial has happened I would be surprised if they don't just change the offer slightly, and you wouldn't expect this to happen unless you get unlucky in general at all. But they can drop the offer entirely if it is in line with their terms you agreed to.

The message says to contact them to continue the application and the status changed on the online portal to pre approved (from full offer) and “awaiting affordability checks” literally nothing has changed in my status and Experian have credit rating for May of 1100 plus so “excellent” I did manage to speak to one of their non mortgage people yesterday and they were confused and couldn’t understand either

If nothing has changed on your side, then fingers crossed this is just a mistake or glitch and can be ironed out quickly.

What a nightmare. I am buying a house and this would be my worse nightmare. Really hope it’s a silly error somewhere that can be easily rectified. Good luck

I've never heard of this happening before - I hope you get things resolved OP.

They can withdraw if one of their conditions have changed. So if they say (which they do), they’ll perform another credit check and it’s significantly changed, they can withdraw the offer.

@Miffed1233 if you’ve not broken a condition it could be a mistake.

AIPs are irrelevant, the new lender will need a valuation, payslips, bank statements to etc, it’s not a few second process.

The problem is the increase to your cc limit. You should not have done that. Ask the bank to lower it back to what it was when you were approved. Every $ of available credit significantly drops your borrowing capacity.

No it doesn’t, it only what is utilised.

I've seen this happen once (ex conveyancing sol). It wasn't too do with affordability it was too do with the build construction. The bank changed their terms and decided they wouldn't lend on a non standard construction.

In any event we had exchanged and similarly the offer was pulled just after. By some absolute miracle the buyers managed to get a mortgage offer in 2 days (Santander!) and we completed one day late so minimal interest for late completion.

I hope OP it is just one big misunderstanding and you'll get answers today.

So hopefully it’s just a mistake and they’ll reinstate it when you call them.

If they won’t reinstate it, then (as I expect you know!) you are still legally obliged to complete the purchase.

So in your shoes I’d call a mortgage broker - they will charge you a fee (I paid our last one £250, so not huge in the scheme of a property purchase) but they can arrange a new mortgage much more quickly than you’d be able to alone.

Also inform the whole chain what has happened and that you are urgently trying to deal with it but may have to delay completIon, very sorry etc. That gives them warning so they can try to reduce any expenses caused by a delay.

Is completion in one week? It’s unlikely they could get the new mortgage in place that quickly, so when the completion date comes the seller will serve a “notice to complete” on your solicitor.

You then complete as quickly as you can, but of course you’re liable for expenses caused by the delay. The other parties do have a responsibility to mitigate those expenses (ie keep them as low as they reasonably can).

If the mortgage was cancelled due to a mistake by the mortgage company you can complain to them and may get compensation for any extra expenses, if it was caused by a mistake by your solicitor (doesn’t sound like it could have been) then you can claim compensation from them,

Also worth checking if you have legal cover with your home Insurance as that may cover extra advice needed on this or extra legal fees eg around the notice to complete.

This whole mess is another really difficult flaw in the English property buying system! Must be very stressful for you, I hope it works out.

@Pinkchickenwine Yeah it does. Just a quick google, but it does impact as they need to make sure you can afford payments if you max out the cards

No it doesn’t! Google is not always correct!

And the $ indicates that’s not from the UK 🙄

Your solicitor may be at fault for not ensuring funds are available before exchanging. Is it a small practice or one of the big conveyancing companies? Or the lender has made a mistake.

Why are you continuing to comment when you clearly have no idea about the process or who is "liable" for what and when?!