Is it normal for a bank to withdraw mortgage approval?

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Ellie32

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**Admin - I read the rules for posting and bar the earlier thread title fail to see how I have broken rules - If this breaks rules I will delete the thread.**

Last February I got mortgage approval. I had a relative going guarantor on the mortgage with me.

The approval was for 12 months (I am 100% certain of this).

On foot of approval I placed a 10,000 euro non-refundable deposit on an apartment, I signed contracts to buy the apartment and my current home is "Sale Agreed".

Last week I began the process of trying to start drawing down the funds as my new apartment is nearly ready.

Today the bank got back to me and told me that they were withdrawing their mortgage offer. They initially told my broker that it was because my
guarantor had defaulted on a loan a few times and had three months arrears, all since last Christmas.

I asked my guarantor about this and he stated unequivocally that this was 100% not true, which I believe as I have a copy of his credit report and it is not on that. He is so angry about it that he is planning on taking legal action over it.

As a result of this I tried contacting the bank directly. I got talking to the "manager" who had claimed to my broker that the guarantor had defaulted. When confronted with this, and the fact that neither of our credit reports show anything untoward since February, he backed down a bit but then claimed that he could only talk to my broker and not me.

I asked him what had changed since February that had made them withdraw their offer which is meant to last for a year. He couldn't tell me. I explained that as a result of their offer I had paid 10,000 euro signed contracts and have my own place "Sale Agreed" and that I will be seeking legal recourse for them withdrawing like this. Again he didn't say too much bar he will be in touch with my broker.

At the moment I have lost ten grand, I'm at the mercy of the builders of my new apartmen who could sue me for a lot more than ten grand and I have racked up thousands more in legal and estate agent fees as a result of the bank backing out for absolutely no reason.

Do banks often withdraw mortgage offers like this? Has anything similar happened to anyone else? Do I have any recourse? Any advice on what to do would be appreciated.
 
Ellie32 said:
I asked him what had changed since February that had made them withdraw their offer which is meant to last for a year.
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Is this a rhetorical question? If not then you're in for a shock - the world is a VERY different place to what it was in February.

When you refer to Approval - presumably this is 'Approval In Principal'? If so then it is pretty meaningless and as you have found out can be withdrawn or revised downwards or have the rate changed without notice.
 
rmelly said:
Is this a rhetorical question? If not then you're in for a shock - the world is a VERY different place to what it was in February.

When you refer to Approval - presumably this is 'Approval In Principal'? If so then it is pretty meaningless and as you have found out can be withdrawn or revised downwards or have the rate changed without notice.
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I understand how that question would sound rhetorical.

As a Civil Servant I would be seen as quite a safe bet I'd imagine.

What's the point in giving approval in principle at all then if they just withdraw it without informing you?
 
Most bank's offer letters are only valid for 3 or 6 months. It should be in the small print in the terms and conditions on your offer letter. However, up to now the banks have been happy to overlook that little detail when all was rosy in the garden.

It's a difficult situation to be in. You really need to talk to the bank or your broker to get this sorted out. What is your solicitor advising? You should definitely get in touch with him if you haven't already.

By the way, do you really need to buy in the current climate, especially if you need a guarantor to get a mortgage? Presumably the property you've signed contracts on has fallen in value since February.
 
Loan approval in principle is normally issued subject to terms and conditions (the small print of course).

Unfortunatley banks can pull out of loan offers.

Part of the reason the economies of the world are in the state they are in is because Banks have been given the opportunity to pretty much do whatever they want to do, normally at the expense of the little man.

That said, I would advise you to get legal advice (from a recommended lawyer). Just be careful of the expenses involved in going against banks or mortgage providers

I know somebody close to me who had an iron clad case in which certain banks were proven to be fraudulent and irresponsible in their actions to the cost of hundreds of thousands to their client. The person won the case but only after these banks dragged them into court (because the banks thought the clients would drop the case if it cost too much). In the end the banks were proven completely at fault but the settlement didnt even cover the legal fees.

Im not ranting, Im just saying, be careful and mindful of what can happen, even when you are right its not to say that you will get what you deserve.
 
In the end the banks were proven completely at fault but the settlement didnt even cover the legal fees.
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They should have gotten their fees and compensation.
 
OP, have you considered getting the mortgage elsewhere? If you have tried this and no one else is willing to lend, then I don't really see what the original bank has done wrong, other than not tell you.
 
rmelly said:
OP, have you considered getting the mortgage elsewhere? If you have tried this and no one else is willing to lend, then I don't really see what the original bank has done wrong, other than not tell you.
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I spent a lot of time earlier in the year approaching all the banks. This bank was willing to lend me more than any of the others. On the basis of that I went and paid the 10k, signed contracts and am Sale Agreed on my own property.

None of the above would have been done if the bank had not agreed to lend me the money.

I am now facing legal action through no fault of my own.
 
NorthDrum said:
In the end the banks were proven completely at fault but the settlement didnt even cover the legal fees.
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This is odd. Was it in Ireland? Normally in Irish court cases, where one party is found to be completely at fault, the court dictates that settlement in the other party's favour includes their legal fees.
 
Ellie,
Was it just approval in principle or did you or your solicitor receive an actual formal loan offer?
 
NorfBank said:
Ellie,
Was it just approval in principle or did you or your solicitor receive an actual formal loan offer?
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My solicitor received a written formal offer but couldn't sign and return it as my own place had not been sold and it needed to be in order to draw the mortgage.

I still should have 6 months left to draw it down according to the literature they sent me.
 
Offers are now usually valid for three months and valid only if signed and received by the lender within three months.
 
Would you be eligible for a shared ownership/county council mortgage? Have contracts actually been exchanged on your own property? Or is it still just Sale Agreed with a refundable deposit at the estate agents. Sale Agreed actually means nothing in today's market.
 
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