Purchase deposit and mortgage refusal: when can you get a refund?

You like the apartment, the seller has other interested buyers, and you sign a preliminary sale and purchase agreement and transfer a purchase deposit. A bank adviser has already said your income should be enough. Yet the property has not been valued, the application has not been assessed and there is no final financing offer. Reserving the home at this point is a contractual commitment as well as an emotional decision. Here, a purchase deposit means the advance paid to the seller towards the price; it is distinct from the mortgage deposit, or total contribution from your own funds, required by the lender.

The short answer: a mortgage refusal does not automatically entitle you to a refund of the purchase deposit. What happens to the money depends primarily on the preliminary agreement: whether it contains a clear financing condition, what the buyer must do and what counts as sufficient evidence of refusal. Lithuania's State Consumer Rights Protection Authority (VVTAT) specifically advises buyers to check before signing whether the seller allows them to withdraw without loss if they cannot obtain a mortgage.

Before you commit. Reserve a property only when you understand both the amount of the purchase deposit and the arrangements for refunding it. Saying that “the buyer will purchase using bank financing” identifies the source of funds but does not necessarily explain what happens if financing is refused.

The bank said “it should be possible”. Why is that not a final yes?

The Bank of Lithuania distinguishes general information about loan terms, standardised information and a binding offer. An online calculator, a conversation with an adviser or an initial income assessment helps you plan, but is not a formal promise to lend. An individual binding offer is made only after the lender has assessed your creditworthiness and must remain valid for at least 30 days.

Before then, the bank still needs to assess your income, commitments, credit history, any co-borrower and the specific property. Responsible lending requirements set minimum standards; each lender can apply stricter internal criteria. Even if you have the required mortgage deposit, financing is not guaranteed. Our guide to the 10% deposit for eligible first-home buyers explains the relevant conditions. The lender must assess your eligibility and financial circumstances individually.

Buyers and an adviser review a floor plan, valuation and mortgage documents — Choosing a home, obtaining a valuation, passing a credit assessment and receiving a final offer are separate stages.

The financing stages: where do you actually stand?

Stage	What you know	What remains uncertain
Calculator or consultation	An approximate loan amount based on the information supplied	Whether the bank will approve you and the chosen property
Application submitted	The bank has begun collecting and checking information	The decision, interest margin and additional conditions
Property valuation	The valuer's assessment of the property offered as security	Whether that value and the bank's risk assessment support the full loan required
Binding offer	A specific amount, cost, term and set of conditions	Whether you will meet all conditions for releasing the funds
Loan agreement and release of funds	You have signed a financing agreement	Payment may still depend on mortgage security, insurance or other documents

Another common surprise is a valuation below the agreed purchase price. The Bank of Lithuania explains that lending is calculated against the lower of the purchase price and the assessed value. If you agree to pay €200,000 but the property is valued at €180,000, the difference is not part of the value securing the loan. You may therefore need more of your own money. Our article on what to do when the mortgage valuation is too low examines this risk in detail.

When can the purchase deposit be refunded, and when is it at risk?

Article 6.165 of Lithuania's Civil Code defines a preliminary agreement as a written commitment to enter into the main agreement later. It does not itself complete the property sale. However, the parties can agree liability provisions and, in some circumstances, provide for the advance payment to serve as a contractual penalty. Lithuanian Supreme Court case law shows that the name given to the payment does not settle a dispute: the contract as a whole, the parties' true intentions, their conduct and the reasons for non-completion matter.

The buyer is better protected if the agreement expressly allows withdrawal and the refund of a specified sum within a set period after the buyer has taken the agreed steps and obtained the required bank response before the deadline. Without such an exception, the seller may argue that finding the money was the buyer's responsibility and that the buyer failed to honour the commitment. Any dispute will still turn on its individual facts; this article cannot promise an outcome.

Take care with the Lithuanian terms used to describe payments. The Civil Code does not allow a preliminary agreement to be secured by rankpinigiai, a specific statutory form of earnest payment, although people often use the word loosely. An avansas, or advance, is normally part of the future purchase price, but expressly agreed penalties can affect whether it is refunded. If you are unsure what your payment clause means, have it reviewed before transferring money rather than after a mortgage refusal.

A financing condition that covers more than one outcome

A useful condition needs more than a sentence copied from the internet. It should reflect your budget, the property's condition and the lender's actual process. Before signing, agree clearly on:

The required outcome: a minimum loan amount or a maximum contribution from the buyer's own funds.
The scope: whether a decision from one lender is enough or applications must be made to several.
The timetable: deadlines for a complete application, the valuation and the lender's response.
Valuation risk: what happens if the value is lower and the bank offers only partial financing.
Evidence: which written response or decision from the bank will be accepted.
The refund: the amount, the number of working days allowed and any deductions that are excluded.
The buyer's duties: providing accurate information on time and not deliberately weakening their ability to repay.

The financing clause also needs to work alongside the property checks. A bank may reject a property as security because of its registered use, incomplete construction, documents or other characteristics. Before reserving it, use our core property documents checklist and check exactly what comes with the apartment. The agreement should also distinguish a lending decision from property defects that the seller failed to disclose or that emerge later.

“I couldn't get the mortgage” can mean four different things

Avoid leaving everything under a general reference to “refusal”. An outright rejection, an offer for less money, an offer subject to a condition you cannot meet and no response before the deadline are different outcomes. If the agreement covers only the first, the other three may fall into a grey area even though the practical result for you is the same: you cannot pay the agreed price.

For example, a bank may accept your creditworthiness but lend less because of the property valuation; require you to repay a consumer loan first; reject the property as security; or fail to decide within a very short contractual deadline. The condition should identify which outcomes allow withdrawal and which merely allow further negotiation over price or timing. It should also clarify whether the bank's response must state the reason for refusal. A lender does not always disclose its internal risk analysis in the detail a seller might want.

The seller reasonably wants to prevent misuse of the exception. A balanced clause protects both parties: the buyer agrees to supply complete and accurate information on time, and the seller agrees to refund the advance if the buyer can show that the agreed financing conditions have not been met. Both benefit from realistic time for the valuation, bank checks and additional documents, rather than a date that looks convenient in a template but does not fit the transaction.

Also address what happens if the seller withdraws. If financing is in place but the seller changes their mind after the preliminary agreement, that is a different scenario. That guide covers the buyer's next steps and evidence to preserve, rather than the mortgage-refusal condition.

Already paid? What to do now

Read what you signed. Identify the financing, advance payment, penalty and notice provisions, and the deadline for the main agreement.
Complete the application immediately. Give the bank everything it requests and retain evidence of submission.
Communicate in writing. VVTAT recommends keeping emails, messages and payment records that demonstrate the buyer's active efforts.
Do not wait until the last day. If the bank needs longer, propose a written extension before the deadline; a verbal assurance does not formally amend the written deadline.
Disclose material changes. New vehicle finance, starting a new job with a probationary period or inaccurate information may weaken an argument that financing failed for reasons outside your control.
Get individual advice before terminating. Where a large sum is at stake, a lawyer can assess your specific clause and evidence.

If the seller is acting as a business, consumer contract terms may fall within VVTAT's remit. A dispute between two private individuals is generally resolved by agreement or through civil proceedings. Where the seller is still repaying a mortgage, the payment sequence also matters; our guide explains how to sell a mortgaged property.

Important. This English edition was prepared on 6 September 2026 from the Lithuanian article dated 30 August 2026. It provides general information, not individual legal or mortgage advice. The lender's criteria, the property's acceptability and the consequences of the agreement depend on the facts and the signed documents.

Frequently asked questions about purchase deposits and mortgage financing

Is my purchase deposit automatically refunded if the bank refuses a mortgage?

No. There is no automatic rule covering every transaction. The outcome depends primarily on the financing and liability clauses in the preliminary agreement, how both parties acted and why financing was refused. A clear clause can provide for a refund; without one, the buyer's liability may be disputed.

What should the financing condition in a preliminary agreement cover?

It should do more than say ‘if no mortgage is obtained’. Define the required loan amount, application and decision deadlines, acceptable evidence from the lender, what happens if the valuation is too low, the buyer's duty to act diligently and the exact deadline for refunding the purchase deposit.

Does a bank adviser's verbal approval count as mortgage approval?

No. A consultation, calculator result or general affordability assessment is not a formal binding offer. The lender issues that only after assessing creditworthiness and the details of the specific transaction.

What if the bank agrees to lend a smaller amount?

That depends on the agreement. If the financing condition specifies a minimum loan amount or the maximum amount the buyer can contribute, a smaller offer may fall within the agreed exception. If it refers only to a loan being refused, partial financing can lead to a dispute.

Does a low property valuation count as a mortgage refusal?

Not necessarily. The bank calculates the loan-to-value ratio using the lower of the purchase price and the accepted valuation. It may offer a smaller loan, so this scenario should be addressed separately in the preliminary agreement.

How many lenders must I apply to under a financing condition?

There is no universal statutory number for this particular contract condition. The parties can agree on one or more lenders and the evidence required. Buyers should submit complete applications on time, cooperate with lenders and keep written responses.

Does a preliminary property purchase agreement have to be notarised?

Usually not: a preliminary agreement must be in writing, while the main sale and purchase agreement for Lithuanian real estate must be concluded before a notary. For a high-value or unusual transaction, have the draft checked individually before transferring money.

What should I do if I have paid the purchase deposit and the bank is taking too long?

Check the contractual deadlines immediately, supply any outstanding documents, inform the seller in writing and, if necessary, propose a written extension before the deadline expires. A bank delay does not itself change your agreement, so do not let the deadline pass without addressing it.

Paid a purchase deposit before your mortgage is approved? How to protect your money