Loan refusal
A lender's decision not to grant the requested financing. When it concerns the loan covered by the condition precedent, the refusal lets the buyer withdraw from the sale and recover their deposit. A refusal certificate may be required to trigger this protection.
Key points
- A lender's decision not to grant the requested financing after reviewing the file.
- Triggers the mortgage condition precedent: the buyer recovers their deposit.
- The refusal must be evidenced in writing to activate the contractual protection.
- The broker analyses the grounds to redirect the file or prepare a stronger application.
Frequently asked questions
How does one obtain a loan refusal certificate usable for the condition precedent?
The borrower must expressly request from the bank a written letter or document specifying the refusal and the conditions of the requested loan. A mere verbal statement or silence is insufficient. Most preliminary contracts set a precise deadline to produce this certificate; missing this deadline can forfeit the protection of the condition precedent.
Does a refusal from a single bank suffice to trigger the condition precedent?
It depends on the terms of the preliminary contract. Some pre-contracts require the buyer to approach several institutions before invoking the refusal; others accept a single refusal. The broker must carefully re-read the condition precedent clause to define the minimum number of applications required.
What mistakes should be avoided after a first loan refusal?
The main mistake is to immediately submit the same unchanged file to other banks: successive refusals leave traces and weaken the file's credibility. It is better to analyse the grounds for refusal, debt ratio, insufficient deposit, incomplete file, and correct the blocking points before any new application.
In practice
A buyer receives a refusal from their main bank due to a 37% debt ratio; the broker identifies a partner bank applying the differential method for rental investments, which brings the ratio down to 31%, and secures financing approval in under two weeks.
Official sources
- The sale when the mortgage is refused · Service-Public.gouv.fr
- Sale agreement and loan condition precedent · Service-Public.gouv.fr
- Obtaining a mortgage loan · Service-Public.gouv.fr