Mortgage offer withdrawn after exchange, can I still complete next week?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

No advice OP, but this sounds horribly stressful for you and I really hope you get it sorted. Xx

I’m a mortgage adviser….

Just last week, I had to deal with a complex case, client didn’t disclose all credit cards.

the reduced mortgage was based on the fact he had more credit than he declared, it had nothing to do with the amount of credit he could’ve had on that card.

So for example he had £4k more than declared, his loan was reduced significantly, his option was that he paid back the £4k and they reinstated the mortgage. If it was based on the availability of credit, he would’ve had to close the account……. Which he didn’t, he just paid back the amount owed.

The bottom paragraph, of your post makes no sense to me.

But yes I’ve got a good knowledge of affordability, credit score, etc.

I think Halifax are known for having some idiosyncratic affordability rules.

I pay my credit card off in full every month, and have done ever since I first got one almost 30 years ago. I have a high credit limit as a result, but never actually go over 10% of my available credit. I had no other debts of any description (I was mortgage-free before buying my current house). “Excellent” credit rating.

Halifax made it a written condition of my mortgage offer that I could not do any spending whatsoever on my credit card for the two months prior to releasing the funds. It was honestly bizarre (and a pain in the arse as I had to take the card off Apple Pay etc).

This is so stressful for you - I can’t believe they’ve done this without immediately explaining what happens next.

I hope you get answers soon!

A lender can withdraw at any time up until completion but it’s very rare and usually based on something significant like a huge credit score drop because of hard searches, additional borrowing etc., or missed payments on other borrowing or bills. Of none of these things have happened they may have made an error? Unfortunately you will still be liable for the 10% deposit - or whatever has been agreed, so hopefully it can be resolved. Keeping fingers crossed for you.

That's america she's not in america the rules are different

Are you sure your mortgage offer has not just expired?

OP clarified that he hadn’t

And I’ve known 2 sets of people have house moves fall through on moving day - both with moving vans packed up outside the houses they were selling. One the vendor pulled out and one their buyer pulled out. No wonder buying/selling houses is one of the most stressful things you can do!

This must be so stressful, I hope it resolves

Something similar happened to a family member in Autumn 2022.

He had secured a very advantageous five year fixed rate at a time just before borrowing costs began rocketing.
The lender tried to pull the funds between exchange and completion by revisiting some minor technicalities around the leasehold which the lender claimed could affect the valuation.
There can have been no justifiable concern given that the mortgage was for less than 65% of the property price.
The issue had been covered by the buyer’s
solicitor and signed off by the lender weeks beforehand and was documented.
The solicitor and the estate agent had never experienced this situation before.
The suspicion was that at a time when the lender was going to have to pay more on
the money markets to finance mortgages they were reviewing high value / low interest mortgage offers.
Surely if this practice goes unchallenged it will undermine confidence in the conveyancing process.

This thread highlights people do not understand the difference between:

• credit score ie how reliably you pay your debts; and
• borrowing power / affordability ie how much you can borrow and meet repayments without financial hardship.

Increasing credit card limits can help with your credit ulitisation rate ie you have more "unused" credit. BUT it also impacts your borrowing power as you now have more serviceable debt.

Increasing credit exposure through change to credit card limit will reduce borrowing power (ie affordability) due to the bank recalculating based on current available credit levels. If OP is borrowing close to the maximum the bank will lend, then this reduction to borrowing power may mean the maximum the bank will loan drops from 600k to 550k, which may be less than what is required to complete the purchase.

OP said "the notification received yesterday just said a drop in credit score and affordability"

Exactly this. Had it in 2023 - exchanged contracts. Ordered funds from Santander straight away (to arrive the day before completion - which was four weeks away). All acknowledged. Two days before completion. (A day before funds were due) got an alert from lender and they’d withdrawn the mortgage offer.

These things do happen. Client had ordered a sofa on credit to be delivered to new house. So lender withdrew offer.

I hope OP can get is sorted out.

Just for you with reference to UK.

It’s not true! Google is not sways right 🤦‍♀️

Yep! Don’t purchase anything on credit until you’ve completed !

Its normally overly excited FTB, ordering everything for their new home 🤦‍♀️

I don’t believe that could’ve been the case! The lender chose one person to try and stitch up for a higher rate?

It really depends how close you were cutting it on affordability.

If you were borrowing a lot vs your income (eg more than 3.5 x salaries), already had an extended (30 or 35 year term), had other costs such as childcare etc making it less affordable, you could have been very very close to limits and it wouldn't take much to tip over. Buying anything on a payment plan, using klarna etc.

We once had a mortgage agreement cancelled when we went to draw it down, because of "undeclared debt". Discussions identified it was a single (and small!) supermarket shop on my (fully declared, with history) credit card and it should have never been cancelled over that. The product was no longer on the market but luckily we had used a mortgage broker and they worked with the bank to get the underwriter to recreate it for us. It only took about 24hrs overall but they were 24 stressful hours!

I was a mortgage underwriter in a previous life. I have worked on cases where the offer was withdrawn on the day of completion! This was down to the borrower increasing debt after the initial offer was made, thus meaning they failed the affordability test. It's a fair few years since I worked in this area, so it may be different now, but we would always do a final credit check before funds were released. It wasn't uncommon for people to take out huge loans, car finance, or incease credit card debt once they'd had their mortgage offer thinking the bank wouldn't check. If they were tight on affordability this extra debt made all the difference😔.

If nothing like that has happened and it's just a case of the increased credit card limit that has impacted your credit score, funds can be transferred to the sols same day assuming the bank will reissue the offer. Hope it all works out for you. 🤞

Yeah that's not the same

Most conveyances in work with would have submitted a COT and got confirmation of funds release for completion before committing to exchange.

I don’t think they randomly picked one borrower.
It was a very high value loan - in the top 1% of mortgage loan values. So I think it was scrutinised again in the climate of fast rising interest rates.
What is worrying is that lenders can withdraw the offer of mortgages after exchange. Buyers have at this point entered into a legal contract to purchase a property and may lose their deposit and maybe be open to other legal actions for failure to complete.
I don’t think many borrowers are aware that this could happen, however remote the possibility. If they did they could take advice from their solicitors in advance on any steps they could take to minimise the risk.

Something must have gone wrong here.

A limit increase for one card wouldn't have done this.
A drop in credit rating would have to be extremely significant to cause an offer to be withdrawn.
It sounds like adverse credit was applied more than anything - could you have missed a payment? The mortgage advisor would have seen that however so it doesn't make sense.

Good luck OP. What a nightmare.

You don’t understand that the “credit score” supplied by the agencies to customers is not what the banks base lending decisions on?