FTB - Mortgage Retention on £65k House! Stressed!

Bsewol · 27 November 2014 at 11:48PM

Hi all

Just signed up here as I'm getting a bit stressed over my first house buy.

The house in question is a 2 bed semi detached which was originally up for 90k - reduced to 75 and the owner accepted 65k (a very good deal for the property)

The property does need some work (upvc all windows, refurb of kitchen / bathroom / bedrooms) But nothing that I wasn't already planning to do with my spare money.

Here's where I'm at:

FTB but need a mortgage.

£35k deposit
£30k mortgage
£7k left to do house up (+ monthly earnings that I get a bit at a time)

Problem is I went for the 30k mortgage which was no problem at all in principle / accepted by the underwriters. I went for just the home buyer valuation report (as I already had a full building survey separately)

The mortgage lender came back and put a 10k retention on the mortgage based on:

- Asbestos roof (1930's house) is coming to end of it's life and needs repairing / replacement.
- Timber windows need repairing or replacing
- full damp survey / timber survey (if damp in timbers)

All the work must be fully guaranteed (I presume e.g 20year gurantee on the works done etc)

My mortgage term was 6 years, the above work I was going to replace part of the roof anyway (I'm in the building trade and would be able to get a cheaper job done - as for the gurantee I wouldn't probably be able to get somethingn in writing by someone who is "credible" enough that the bank would want?

I was going to replace the windows with upvc - but again, it doesn't help having the money taken away in the first place via retention to find for it? As I'm going to have to find the shortfall just to get the property over the line and into my hands? I doubt the seller would drop it any more as it is? Especially not for windows.

As for the timber and damp survey - I already had one done at the start and they gave me a "free" valuation, it needs internal chemical dpc / salt resistant plastering / the daft g£t that owned it before blocked up two of the air bricks with block paving (so they probably just need freeing up!) anyway that work was about £1,750...

I'm just stuck now and can't believe that iv asked for 30k, they will only give me 20 on retention. It's ridiculous ... I surely am better off getting a personal loan?!?!!!!

Hmmf. Fed up at the minute. I really want the house too.

Bsewol · 28 November 2014 at 12:00AM

Apologies;

Any advise would be appreciated.

I presume if the value of the work comes in below 10k they will then remove the retention to the value of the work?

But also natwest only give minimum of 25k mortgages. So I guess I can't just forget about the 10k retention even if I do find the shortfall?

Regards

Brad

Thrugelmir · 28 November 2014 at 12:16AM

The retention is there to encourage you to get the work done. Once completed the retention will be released. As you say may be worth borrowing the money to get the work done. Perhaps rejig your priorities in the meantime. .

swstevewil · 28 November 2014 at 12:39AM

I don't know if this would be standard practice but I had a retention of 5K on my first house. I was told that the cost of work was irrelevant. I was also told that if I got 5K knocked off the house price that was irrelevant. They were always going to hold that figure of 5K back.
I got the work done, part of which was new floor in kitchen. I thought I would then get the 5K back and put a new kitchen in with it. Upon inspection of the work carried out the assessor said it's got no kitchen so we won't be releasing the money till it has.

Bsewol · 28 November 2014 at 12:43AM

Sounds like I either have to

A) find the 10k to get it over the line (full 65k offer price) then find the money for the work in dribs n drabs in order to get money back?

Or

find the 10k to get it over the line and don't bother doing all the work but just the stuff I was prepared to do anyway? E.g windows and a bit of the damp work ?

Hmmf

Typhoon2000 · 28 November 2014 at 10:59AM

Or reduce you deposit by 10k.

ACG · 28 November 2014 at 11:16AM

I reckon it will be the damp that is causing the retention but asking the lender/surveyor what it is thats causing the retention - it could be everything it could be one particular thing with the others just being noted as needing doing.

You can then work out your options moving forward.

Bsewol · 28 November 2014 at 1:34PM

So if I lend 40k rather than 30k, they keep 10k on retention (30k in total) and that way it's all back to square one (I just put the 10k In as normal)?

Would that mean id have to have another mortgage assessment through natwest?

Do I have to have the retention? E.g if I only ultimately needed toget back £5k then the loan amount would amount to £25k?

Sorry for all the questions as the above does seem confusing.

ACG · 28 November 2014 at 2:29PM

Theyve put a full retention on there by the looks of it.

So whether you purchase it for £500 or £500,000 I think the retention will be for whatever the purchase price is. You need to get on the phone to natwest and ask them the questions as we will just be second guessing.

Bsewol · 28 November 2014 at 10:50PM

What I don't understand is:

There minimum loan amount is £25k

If I decide that I don't need their £10k to bring it up to 30k ... And only borrow 20k; this is going against their statement?

I also can't understand that they say the house is worth £65k but would be worth 75k after 10k work is done... But the purchase price is 65 so why does it matter? There shouldn't be a retention surely.

... Bit strange from other stories iv read

Bsewol · 28 November 2014 at 11:03PM

Thank you kindly for your responses so far. Iv been on the phone to my mortgage advisor today and will be on the phone to the underwriters shortly

FTB - Mortgage Retention on £65k House! Stressed!

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