Buying or selling a property is meant to be an exciting time.. But it can sometimes be a disappointing and heartbreaking one too. Sales fall through all the time. In fact, around 30% of sales collapse.
But say you got a long way into the sale and even secured your mortgage offer… What happens to your mortgage offer if your sale falls through?
Some lenders will happily transfer your mortgage offer to the next property you find. They'll usually want a surveyor to check it first, and this could could cost you around £250. If the survey is satisfactory the lender will then submit a revised mortgage offer, suitable for your new purchase.
It's not always easy to transfer your mortgage on to a new property though. We'll cover this in much more detail below...
If you've recently had a sale fall through and are hoping to get things back on track fast, our free quiz can help. Hit the button below to get started:
1. Can you transfer your mortgage offer to a new property?
Not all lenders will be happy to transfer the offer to a new property. Some will insist that you start an entirely new application.
Bear in mind too that mortgage offers are only valid for a set time. For most lenders, it's around 3 months. If more than 3 months have passed since you received your original offer, your lender may request up-to-date payslips before finalising their new one.
Not the end of the world, but just another step to bear in mind.
So if your purchase has just fallen through and you're trying to salvage your mortgage offer for your next purchase, what do you need to do?
1.1. How to transfer your mortgage offer to a new property
Speak with your lender or broker right away to check if they're happy to port it over to the next property you find.
To understand the steps that follow, it's useful to understand the mortgage approval process, and how you can use it to your advantage.
You should also be aware of some of the other costs involved. These can be substantial, and will vary depending on your lender, broker, and solicitor.
We'll cover each of these topics next.
1.2. The mortgage approval process: How do lenders decide whether or not to lend?
There are two main checks that a lender does before they decide to make a mortgage offer:
- They check they're happy lending to you. This involves doing a credit check on you, and requesting your bank statements and payslips to ensure you're good for the loan.
- They check they're happy lending on the property. For this, they have a RICS survey/valuation done. As Ricsfirms.com outline here, "The valuation advises the lender of the value of a property and of any... significant defects which might affect its value". They also have the solicitor report any legal defects to them.
If you've received a mortgage offer, it's because the lender's done their checks and are happy with both you and with the property.
So if your purchase falls through and you decide to buy a different home instead, the lender doesn't necessarily need to re-check you. They just need to recheck the property.
This means they'll want to carry out a new survey/valuation on it.
So when your purchase falls through and you're wondering what to do next, start by contacting your lender/broker.
2. What happens when you transfer your mortgage offer to a new property?
Hopefully when you contact your mortgage lender (or broker) to explain the situation, they'll confirm that they're happy to transfer it to the next property you find. (Maybe you'll be fortunate enough to find house with no onward chain next time - buying a chain-free house can minimise sale problems).
Assuming this is the case, you just need to get house-hunting again!
When you find your new place and the seller accepts your offer, contact the lender/broker with the details.
Assuming you're within around 3 months of the first mortgage offer being made, the lender won't need to credit check you again or see up-to-date payslips and bank statements. If they do request new information, just get it sent over.
Next, they'll need to survey/value the new property.
2.1. Will I have to pay for a survey?
RICS valuations tend to cost around £250. Most lenders will give you a free valuation if you apply for a mortgage with them. (This is just a bit of a marketing ploy to help entice you to use them).
However, most lenders will limit it to one free survey per application, or per person. This means that if you end up needing to transfer the offer to a new property, you may need to pay for the next valuation.
This can cost you £200-£300.
Of course, you can potentially avoid this fee by starting an entirely new application, or by applying with a different lender. Just be aware that this will probably take longer, and you may end up paying more in the long run if the next mortgage deal isn't as good.
If you used a mortgage broker, you may be charged for each mortgage offer they successfully secured for you. If this is the case, you'd be worse off even after saving the money on the survey.
Once the survey has been completed, and assuming it's all clear, your lender will begin processing your new mortgage offer.
The figures will change to reflect your new property and purchase price, but other than that you'll be right back where you hoped to be: With a mortgage offer all ready to go for your new purchase.
2.2. Will I incur other costs when I transfer my mortgage offer?
Possible mortgage broker fees
If your mortgage offer is being transferred to a new property, some brokers may charge you an additional admin fee. This is because their fee is usually payable once they get you an offer.
If they then need to do extra work to get that offer amended, it's likely to result in an extra fee. Speak with your broker to ask for the specifics, or check the paperwork you signed with them.
Possible legal fees
Unfortunately, there's a high chance you're going to run into legal fees of one kind or another.
Even if your solicitor works on a "no sale, no fee" basis, you probably paid for searches on your original purchase. Unfortunately, these won't be relevant to your next purchase, so you'll need another set of searches too.
We've written more about this here:
There are some handy tips in that article about how you can potentially offset those extra costs - be sure to check it out.
3. What happens if your lender won't transfer your mortgage offer?
Unfortunately, some lenders won't transfer your mortgage offer to a new property. Instead, they'll insist on you starting an entirely new application.
This means going through the underwriting process again, where they credit check you and review up-to-date bank statements and payslips.
It's not the end of the world, but a bit of a pain. It's going to take longer too.
Unfortunately, you may also incur more costs this way.
3.1. Potential of losing money on broker fees
Most mortgage broker's fees becomes payable when they successfully secure your mortgage offer. If you've since lost that purchase, and if you can't transfer the offer to your new property, you'll likely still need to pay your broker.
Some will work with you and may reduce or entirely ignore their fee. But many will insist on payment. It's a bitter pill to swallow, but at the end of the day they've done their job: They got you a mortgage offer, and now they'll need to get you another one.
On the plus side, if you start an entirely new application you may be offered a free survey again by the lender, which can save you £200-£300.
4. Chains: What happens to your mortgage offer when your own sale falls through?
(If you're not familiar with property chains, check out this article: What is a house chain? (How chains work, with examples).
In this article we've covered what happens to your mortgage offer if you lose your purchase.
But what happens to your mortgage offer if you lose your own house sale? The one you were relying on happening so that you could buy your new place?
Thankfully, the mortgage offer for your purchase won't just evaporate. Mortgage offers are usually valid for around 3 months, so just try and find your next buyer quickly, and hopefully you won't even need to reach out to your lender.
If it does take longer than that, then renewing a mortgage offer is usually quite straightforward:
- Start the process. Just contact your broker or lender and explain their situation
- Find out the requirements. The lender/broker will outline their requirements for renewing the mortgage offer. This will usually just involve checking up-to-date bank statements and payslips from you.
- Submit the paperwork as requested. Send your payslips/bank statements to your lender or broker.
- Wait. The lenders often take 5-10 working days to review documents.
- Receive new mortgage offer. Assuming the lender was happy with everything (and that their own circumstances, products and lending criteria haven't changed in the mean time), you'll receive your new mortgage offer. This will usually be valid for another 3 months.
4.1. Repairing a broken chain quickly
If you're in a situation where you've just lost your sale, then losing the mortgage offer for your purchase might not be your only concern: You also run the risk of losing your purchase if the sellers get tired of waiting for you, or if they have other options.
Cash house buyers can actually be a really good option in this sort of situation. Take our free quiz below to see if a house buying company is a good fit for you:
A genuine, well-funded house buying company can make you an offer within 24 hours, and can usually complete in as little as 14 days. It's a perfect service for a situation exactly like this, where you want it done quickly and don't want to run the risk of losing your onward purchase.
Unfortunately, the downside with these services is that you typically expect to sell at a discount. An offer at about 85% of your original sale price is usually to be expected. However, they'll usually cover your fees and you won't have an estate agent fee to pay, so that somewhat cushions the reduction.
We'll have more guides coming soon to help you find the best cash home buyer if it sounds like a good option for you.
It may be helpful to check out this article for other ways to break the chain.
5. Key Takeaways
Getting a mortgage offer is not so much a tricky process as a laborious one. Completing forms, submitting documents and waiting for the lender is no fun. But having to do it again because of your purchase falling through is a real pain.
Thankfully, most lenders will happily transfer your mortgage offer to a new property. They'll just require a survey on it first, and may ask for up-to-date payslips and bank statements if some time has passed since their original offer.
Speak with your broker or lender as soon as you can after the purchase has fallen through, and check out what their approach is.
If they won't transfer your offer and you need to make a new application, it could be worth consulting with an independent mortgage broker to see if they can find you a better deal. We'll have more guides coming soon to help you find the best mortgage broker for you.
By Matthew Cooper, Co-Founder of Home Selling Expert