Lenders pulling out after Exchange - How prevalent is it REALLY?

DpchMd

So every day we get posts from people asking whether it would be wise to do certain things with their finances between exchange and completion.

In the past week alone, some examples have been:

• Taking out a loan
• Opening a new bank account
• Changing mobile phone contract

All of these requests were met with a resounding DON'T DO IT from our friendly resident mortgage advisers.

Now I appreciate that when making the biggest financial transaction of your life, it's probably wise not to rock the boat. But are we being a little over-cautious here?

I've done a search on the forum and there have been a couple of example of lenders pulling out post-exchange, but I couldn't find any related to such minor changes in credit profile (in fact I couldn't find any CONFIRMED cases of the lender pulling out due to ANY credit-related changes).

Common sense would suggest that if your mortgage lender is going to screw you out of your 10% deposit and cause you potentially irreversible financial damage, they probably won't do it simply because you opened a new current account.

I stand by the advice given - it's certainly wise not to make any changes to your credit profile prior to completion.

But, I'd be fascinated to hear from the brokers any stories where clients have been left high-and-dry by their lenders post-exchange, what the cause was and what the ultimate consequences were.

kingstreet

The only case I've heard of in real life was a mortgage fraud case where the lender got wind and pulled the offer on completion day when the solicitor had the funds in their account ready to complete.

Not one of ours, happily.

The point here is that an application for new credit between application and completion certainly isn't going to do any good and the scope for harm shouldn't be underestimated, even if it might be 1:10,000 or whatever...

Many of our members are trying to micro-manage applications and are breathlessly asking Martin if they should cancel their subscription to Viz, eat Aldi beans and nothing else for three months and reduce the limit on their nil balance credit card.

To not offer the advice above would seem to suggest that that level of micro-management is totally pointless. Which to be fair, it probably is...

MJP43

I dont like Aldi beans.

Will this prevent me getting a mortgage :-)

DpchMd

kingstreet wrote: »

The only case I've heard of in real life was a mortgage fraud case where the lender got wind and pulled the offer on completion day when the solicitor had the funds in their account ready to complete.

Not one of ours, happily.

The point here is that an application for new credit between application and completion certainly isn't going to do any good and the scope for harm shouldn't be underestimated, even if it might be 1:10,000 or whatever...

Many of our members are trying to micro-manage applications and are breathlessly asking Martin if they should cancel their subscription to Viz, eat Aldi beans and nothing else for three months and reduce the limit on their nil balance credit card.

To not offer the advice above would seem to suggest that that level of micro-management is totally pointless. Which to be fair, it probably is...

So your only example is hearsay with limited detail - "mortgage fraud" could be hundreds of things (Thousands if you believe _Andy_ )

I totally agree with you, and I am following this advice during my application.

Anyone else got some examples?

ACG

Hear say or not, the end result could have massive consequences especially if done after exchange.

So for the sake of holding fire on opening a bank account, changing your mobile etc for a month is it worth risking a mortgage? It might only happen once in a lifetime but how devastated would you be if it was your case?

DpchMd

ACG wrote: »

Hear say or not, the end result could have massive consequences especially if done after exchange.

So for the sake of holding fire on opening a bank account, changing your mobile etc for a month is it worth risking a mortgage? It might only happen once in a lifetime but how devastated would you be if it was your case?

Yes I'm aware of this (explained in my post) and I'm familiar with your rhetoric.

Do you have any examples to share?

Goldiegirl

In 28 years of working for the Halifax, the offer was withdrawn after exchange zero times.

So it is quite rare!

Annisele

I've only come across it once (I'm not a mortgage broker, but I do work in financial services). In that case, the payslips the broker had seen weren't genuine, and the so-called employer had never heard of the client.

Thrugelmir

DpchMd wrote: »

Common sense would suggest that if your mortgage lender is going to screw you out of your 10% deposit and cause you potentially irreversible financial damage, they probably won't do it simply because you opened a new current account.

Mortgage lenders will withdraw offers for good reason. Your comment reflect the lack of understanding that prevails these days. Given an opportunity there are plenty of people who will attempt to bend the rules. Vast majority are screened out these days through the application process. A final credit check prior to the release of funds is such a simple and quick process these days. Bound to catch someone every once in a while.

DpchMd

Thrugelmir wrote: »

Mortgage lenders will withdraw offers for good reason. Your comment reflect the lack of understanding that prevails these days. Given an opportunity there are plenty of people who will attempt to bend the rules. Vast majority are screened out these days through the application process. A final credit check prior to the release of funds is such a simple and quick process these days. Bound to catch someone every once in a while.

No, Thrugelmir, my comment does not reflect a lack of understanding.

My comment was on the premise that a lender would consider withdrawing an offer post-exchange because of a minor change in credit profile, such as opening a new bank account or changing mobile phone provider. If a lender were to pull out on this basis, they truly would be screwing their customer.

The reality is they don't pull out for these reasons, hence the purpose of this thread.

Try to be less assuming and stop jumping to conclusions.

Dave_Ham

Have bitten my tongue on a couple of previous posts, but having half an idea does not give you the full landscape for sweeping statements and inflammatory assumptions (see other posts)


I agree that changing a bank account/phone contract should not affect a mortgage offer and certainly not post completion.


That much agreed, but taking additional HP and finance generally (such as a loan in your example) would and has absolutely seen mortgage offers amended (rather than withdrawn)


If a mortgage offered with a set specific income and commitments, an additional financial commitment post offer/exchange has to be factored in.


In reality not all lenders check and not all lenders would even flag this, but the suggestion on here not to do it is valid and prudent.


Anyone who uses Leeds often enough (necessary evil at times) will realise that they do check and do make amendments right up to completion for exactly these sorts of material changes.