2 weeks between exchange and completion - lose deposit?

[NCMortgage]

I'm trying to work out whether its safe to exchange and wait 2 weeks to complete, especially at the moment? If I exchange and my lender withdraws their final mortgage offer before completion, is there any way to avoid losing my deposit? Is this just something I shouldn't even think about doing? I can't afford to lose 10% of the purchase price, it would ruin me.

I don't think the lender can withdraw once the money has been set aside at exchange. (There is a technical term for this which escapes me). Exception may be if the application was fraudulent or you had breeched terms and conditions. Is there a reason for your concern?

They can withdraw their offer - it is the risk that everyone takes unfortunately but if it were common then no one would borrow on that basis.

As long as you have been honest in your application and don't fail their last minute credit check (so don't start opening store cards or buying furniture on finance!) all should be ok.

If they have instructed your solicitor to deal with the mortgage then with a 2 week gap I'd be really surprised if anything happened - I've never heard of it happening.

Apparently it's happening as banks are more skittish due to covid. So, if anything, I've OVER disclosed in my mortgage application, but what if for no material reason my credit score falls slightly, or my non-salary income falls slightly, or the bank get some metrics in and decide they simply don't like the area anymore...they can withdraw the mortgage and I lose £10s of 1000s of pounds in the click of a finger. A lot can happen in 2 weeks, that's the fear.

www.unbiased.co.uk/news/mortgages/thousands-of-homebuyers-lost-deposits-in-property-freeze

I am nervous about this when I buy a house and even though the chances are low it could theoretically happen. Hence Ive tried to keep the gap =< 1 week if possible. Could you do that?

It is always a theoretical risk but more of a risk at the moment
That's why lots of people are doing simultaneous exchange/ completion

Simultaneous exchange and completion is the answer.

It's going to have to be same/next day, isn't it? What a carry on. Why dont these exchange contracts have clauses for bank withdrawn finance - it seems insane that they don't. At least I have removals with packing service, so I can live as normal until moving day then packed up and moved out same day.

It's so, so stressful.

I mean... it just doesn't happen. You've found a story about one couple but millions of transactions have happened over COVID. You just disclose on your application and keep your nose clean before completion - no unpaid credit cards or dfs sofa loans. That's how it all works.

We exchanged, then completed 3.5 weeks later with no issues at all.

@NCMortgage - my solicitor was telling me about this recently OP. It’s happened to those with 10% deposits. They had mortgage offers from either pre-lockdown or they were lucky & secured the very few kicking around. Then banks got twitchy & when run through at the completion point, suddenly withdrawn. Which is awful. My solicitor is really unimpressed. They contact the bank to request release of funds on the day of exchange.

If you have anything above that as a deposit, you’ll be fine. We exchanged 5 working days before completion but a couple friends have recently moved with 14 days between. We all had 70-80% LTV.

That's good news! I'm in the 15-20% bracket - I did get the mortgage really quickly with a desktop valuation, that must be a good sign they're less likely to panic and pull at the last minute, right?

15% to 20% deposit I mean. LTV I wish 😂

A lender withdrawing an offer after exchange is very very rare. Unless you've lied or thought you were about to be made redundant I wouldn't worry about a gap of a week or two.

A lender withdrawing a mortgage offer between exchange and completion is absurdly rare.

Like GU24, in over 20 years of property deals I’ve never been involved where it has happened.

but what if for no material reason my credit score falls slightly, or my non-salary income falls slightly, or the bank get some metrics in and decide they simply don't like the area anymore

Why would any of this happen? The banks only check your credit score and finances at the time of application, they are not continuously monitoring you.

I've also never heard of a bank refusing to lend on a property because they "don't like the area". I think you're catastrophising here.

"Don't like the area" I mean the part of the UK, not the suburb. Prices are holding, or not, depending of what part of the UK you're in.

@LIZS

I don't think the lender can withdraw once the money has been set aside at exchange. (There is a technical term for this which escapes me). Exception may be if the application was fraudulent or you had breeched terms and conditions. Is there a reason for your concern?

Wrong.

Ask for a simultaneous exchange and completion or a Covid rider.

Seriously the mortgage lender isn’t reviewing your mortgage offer every day!

If you’ve been honest it will be fine.

Lenders can withdraw an offer and some will do a final credit check before completion but it's rare. If nothing has changed in your circumstances I wouldn't worry OP.

Thanks to all - you've been so helpful with deciding. Yes, I've been honest, left nothing out. The classic property "2 week wait" isn't normally much of a worry I agree...but when your 2 weeks happens to be during covid, as big businesses begin to fail, and straddles Brexit-final on 31 Dec (ffs the timing 😂) it's all so much more uncertain. I've decided I'll go for something

We have been waiting to exchange since September! NC is right to be worried as our sale has halted 3 times since the beginning of July, through Covid. Firstly we lost the house we were buying, as the woman said she wouldn’t move during Covid, so she took the house off the market 7 weeks into the sale process. We found another house quickly, to avoid causing a delay, (giving the asking price, on agreement that they could fit with the timescales of our chain, moving at the end of Sept, in less than 4 weeks). Then our buyers’ buyer lost their job and mortgage offer, just 2 days before exchange. Our buyers sold again quickly and we were finally supposed to exchange on Friday 4th Dec, moving last Fri, but the buyers at the bottom had their mortgage offer pulled just 4 days before exchange! We are now waiting for their new mortgage, (same provider, but diff terms it seems) to be approved. We have been living out of boxes since Sept. no decorations, no big wooden spoon for my Xmas cake 😂. We had to cancel the removals people and got charged £500. We now won’t move until the New Year. I would leave as little time as possible between exchange and completion, but most mortgage providers insist on 5 to 7 working days between the transactions, so it may be out of your hands. Good luck. I wish we’d never started.

Are you relying on the sale of a property to complete? The issue is less around your circumstances as you look to be in a good position, but if you have buyers then they will need to complete on yours before you can complete on the purchase and that looks to be what caused an issue in the article linked to