Could A Mortgage Offer Be Withdrawn?
With uncertainty in the property market at a level that has not been seen in years, many people in the final stages of a sale, have an agreement in principle on a mortgage or are in the purpose of remortgaging are considering their next steps.
At present, house prices on a national level have remained at the same record-high average prices that have been seen throughout 2022, largely buoyed by a continuing disparity between demand and supply.
For estate agents in Sutton, a similar story has been told, with an average house price nearing £500,000 for the first time ever.
This increase in prices, alongside rising mortgage rates, general cost of living increases and a bank rate higher than has been seen in a decade has led to concerns not only about the increased difficulty in getting a mortgage offer but whether an established agreement in principle could be withdrawn.
The latter eventuality, where a mortgage offer that has already been made is subsequently revoked, is unlikely but can happen in a few unfortunate circumstances.
Mortgage offers are calculated based on a range of criteria but the simple key aspects are your financial status (usually discovered via a hard credit check), your annual income (which is why mortgages as a self-employed individual are more difficult to get) and the property you are buying.
If one of these aspects changes significantly, it could potentially invalidate the mortgage offer and create more risk for the lender than they are willing to take, although typically the vast majority of lenders will in the vast majority of cases go ahead with the offer if the change is not too drastic.
However, if you take out a major line of credit, such as a lease on a car, a major credit card payment or a loan, this could affect your credit status enough to put the mortgage in jeopardy.
As could changing jobs, particularly if you lose your job or go into a self-employed role such as in consultancy.
Finally, although it is rare, if the price of the house changes significantly due to a rapid escalation in value, theoretically a mortgage offer can be withdrawn until the exchange of contracts finalises the sale.