Mortgage Retention Help

heb123

First of all Hello I'm new here.

I've been accepted for a mortgage with the Clydesdale bank 95% LTV first time buyer mortgage.

The House that i've seen is Valued as follows

Market Value in present condition £62,500
Market Value on Completion of essential repairs £72,500

I've put in a conditional offer of £60,000 which has been accepted.
There is a £10,000 retention on the house and at first when I spoke to my advisor at the bank they told me that this wouldnt matter as I was only wanting to buy it at the present price not the £72,500. This was all fine and dandy but now they have came back and said that they will only lend me 95% of my offer minus £10,000.
So now I have to put up £10,000 retention money and 5% of £50,000.
The estate agents that are selling the house also questioned this and said it sounded unusual.

Anyone else experienced this?

Cheers in advance

GMS

Lending will almost always be based on the LOWER of the purchase price or valuation. You cannot negotiate a lower purchase price than the val and swallow the deposit into it.

A retention of 10k must be for serious work and as a result the lender will rightly want to withold funds. You are lucky it is not a total retention.

What are the 10k worth of works?

heb123

thanks for your reply.

There is rot in floor joist ends, no damp proof course and the electrics have to be brought up to standards. Can I not purchase it at the £62,500 and forget about the retention or does the retention still have to come off your offer e.g. mine £60,000 so £47.500 fromm bank and deposit and retention of £12,500 from me.

cheers

GMS

You cannot forget about the retention. You can try but the lender will remember!

Will the vendor complete the require works prior to sale? If so then you may be best to proceed that way.

Alternatively look for another property which does not require 15% of its value in repairs.