The Bank Said “No”, but We Didn’t Stop: A Real Mortgage Case After Lending Criteria Changed

Getting an Agreement in Principle is an important step when buying a property, but it does not mean that the lender’s final decision is guaranteed.

Sometimes circumstances can change even after a client has found a property and is ready to submit a full mortgage application.

That is exactly what happened in one of our recent cases.

The client had a more complex situation: a visa, a 10% deposit and self-employed income. In addition, the previous annual accounts showed a relatively low income, while the latest year showed an income of approximately £44,000.

We needed to find a lender whose criteria could accommodate all of these circumstances.

We Found a Lender and Obtained an Agreement in Principle

When selecting a lender, it was important that they:

• accepted the client’s visa status;
• accepted a 10% deposit;
• could assess the client’s income based on the latest financial year.

We found a suitable lender and obtained an Agreement in Principle.

The client then continued their property search and found a suitable home.

The next step should have been straightforward: submitting the full mortgage application.

However, this was when the situation changed.

The Lender Changed Its Criteria Before the Full Application

In September, we were preparing to submit the full application for the chosen property.

At that point, we discovered that the lender had changed its criteria.

Previously, the higher income multiple required in this client’s situation had been available from an income of £44,000.

Under the new criteria, the minimum income required for this calculation had increased to £50,000.

The client’s income was approximately £44,000.

This meant that when the Agreement in Principle had been obtained, the client met the lender’s criteria. By the time we were ready to submit the full application, those criteria had changed.

Could We Simply Choose Another Lender?

In theory, yes.

We could consider another lender whose criteria would accommodate the client’s circumstances.

However, there was another problem: the alternative lender offered a significantly higher interest rate.

Another possible solution would have been to increase the deposit, but the client did not have additional funds available.

So, although other options existed, they were either considerably less favourable or simply not accessible to the client.

Why Did We Approach the Lender Again?

At this stage, it would have been easy to say:

“The criteria have changed. There is nothing more we can do.”

Instead, we decided to discuss the case with the lender again and highlight one important detail: the Agreement in Principle had been obtained before the criteria changed.

At the time of the initial assessment, the client met the lender’s requirements.

We therefore submitted a separate request asking the lender to review the client’s circumstances individually.

Then we waited for their decision.

The Lender Agreed to Make an Exception

A few days later, we received a response: the lender agreed to make an exception for this client and apply the previous criteria that had been in place when the Agreement in Principle was obtained.

As a result, the property purchase was able to move forward.

This case demonstrates why a negative response does not always mean that the process has reached a definitive end.

Of course, a lender is under no obligation to make an exception, and an outcome like this can never be guaranteed. Every case is assessed individually.

However, in certain circumstances, it may be worth reviewing the situation further, particularly when the criteria have changed after the client has already passed an initial assessment.

Why Doesn’t an Agreement in Principle Guarantee a Mortgage?

This case also highlights an important point about an Agreement in Principle.

An AIP means that, based on the information provided at that stage and the lender’s criteria at the time, the lender has made a preliminary assessment of how much it may be prepared to lend.

However, things can change between receiving an AIP and submitting the full mortgage application.

For example, there may be changes to:

• the lender’s criteria;
• minimum income requirements;
• the maximum amount available in relation to income;
• interest rates;
• the client’s own financial circumstances.

For this reason, an Agreement in Principle should not be treated as a final mortgage approval.

The final decision is made after the full application has been assessed, taking into account the client’s documents, the chosen property and the lender’s applicable criteria.

Why Is Choosing a Lender About More Than Finding the Lowest Interest Rate?

This becomes particularly important in non-standard circumstances.

If you have a visa, a smaller deposit, self-employed income or other financial circumstances that require additional consideration, comparing interest rates alone may not be enough.

It is important to understand which lenders can consider your circumstances and how they will assess your income.

Sometimes a lender offering an attractive interest rate may not be suitable for a particular client. In other cases, a lender that initially appears suitable may change its criteria during the process.

The role of a mortgage adviser in such circumstances is not limited to selecting a lender at the beginning. It also involves supporting the application and exploring available options if difficulties arise during the process.

What Is Important to Remember?

A change in a lender’s criteria does not necessarily mean that a property purchase must be abandoned. At the same time, you should never assume that a lender will agree to make an exception.

In this particular case, an important factor was that the Agreement in Principle had been obtained before the lender changed its criteria, which allowed the circumstances to be referred for further consideration.

The outcome will always depend on the lender, the client’s individual circumstances and the criteria in place at the relevant stage.

If your circumstances are less straightforward — for example, you have a visa, are self-employed, have a smaller deposit or receive income from multiple sources — it can be useful to assess your available mortgage options before actively searching for a property.

Your Home (or property) may be repossessed if you do not keep up repayments on your mortgage or any other debts secured on it.

This post is for information purposes only and does not constitute financial or mortgage advice.