We'd like to remind Forumites to please avoid political debate on the Forum... Read More »
We're aware that some users are experiencing technical issues which the team are working to resolve. See the Community Noticeboard for more info. Thank you for your patience.
📨 Have you signed up to the Forum's new Email Digest yet? Get a selection of trending threads sent straight to your inbox daily, weekly or monthly!
Retention Question Please
Options

johnwey
Posts: 262 Forumite
Heres the scenario chaps.............
Trying to buy a cottage at auction and our maximum bid will be £215k
Will have a deposit of 80K , so need a mortgage of £135k
The cottage needs TOTAL renovation and we will have £75k of our own money to do the work, if we win it
The question is , what are the chances of the mortgage company putting a retention on it ? even though we will have approx 62%LTV
as said we will have 75k of our own money to do the work , but how would we be able to afford to do the work IF the bank puts a big retention on it
Your thoughts would be appreciated
Trying to buy a cottage at auction and our maximum bid will be £215k
Will have a deposit of 80K , so need a mortgage of £135k
The cottage needs TOTAL renovation and we will have £75k of our own money to do the work, if we win it
The question is , what are the chances of the mortgage company putting a retention on it ? even though we will have approx 62%LTV
as said we will have 75k of our own money to do the work , but how would we be able to afford to do the work IF the bank puts a big retention on it
Your thoughts would be appreciated
0
Comments
-
What needs doing to it? Is any of the work needed structural?
Difficult to say but it is a gamble. Could be a total retention in place meaning no funds until works done which would mean breach of contract for sale most likely.
May need to use bridging finance if mainstream finance not possible.I am a Mortgage AdviserYou should note that this site doesn't check my status as a mortgage adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.0 -
Is the property habitable?0
-
What needs doing to it? Is any of the work needed structural?
Difficult to say but it is a gamble. Could be a total retention in place meaning no funds until works done which would mean breach of contract for sale most likely.
May need to use bridging finance if mainstream finance not possible.
Everything , plumbing , gas , electrics , windows doors , stripped back to brickwork , walls knocked down , total gut
no structural work0 -
Thrugelmir wrote: »Is the property habitable?
yes its habitable , just
an old girl lives there and hasnt touched the place for 50 years or more0 -
I realise I cant bid at auction unless I have a mortgage offer in place from the bank............ have 3 weeks from now and only just applied :eek:0
-
You can bid but it's a high risk activity because you could lose your deposit if you can't get the money in time. Most vendors will probably be tolerant for a few weeks but don't count on it, get it done ASAP.0
-
Once you have the valuer's report back, you'll know if you can proceed or not. A total retention is definitely something you couldn't deal with. However with your extra £75k, a retention of anything less than that would mean you'd use some of that cash to make up the difference with the reduced mortgage at completion.
All you then need is a contractor who will accept part-payment for the very essentials until you can get the additional mortgage money released by providing evidence to the lender that those essential repairs have been carried out.
Here's an example;-
Agree to buy for £200,000
Deposit on the day £20,000
Balance to pay £180,000
Mortgage £135,000
Retention £50,000
Mortgage released £85,000
Balancing deposit £95,000
Funds paid on completion day £180,000
Reside of own funds £155k - £20k - £95k = £40k.
Upto £40k can be paid to contractor, with any balance being paid from the released retention money, £50,000, on receipt from lender.
You also need to get your solicitor in to view the legal pack at the auctioneers asap.I am a mortgage broker. You should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice. Please do not send PMs asking for one-to-one-advice, or representation.0 -
kingstreet wrote: »Once you have the valuer's report back, you'll know if you can proceed or not. A total retention is definitely something you couldn't deal with. However with your extra £75k, a retention of anything less than that would mean you'd use some of that cash to make up the difference with the reduced mortgage at completion.
All you then need is a contractor who will accept part-payment for the very essentials until you can get the additional mortgage money released by providing evidence to the lender that those essential repairs have been carried out.
Here's an example;-
Agree to buy for £200,000
Deposit on the day £20,000
Balance to pay £180,000
Mortgage £135,000
Retention £50,000
Mortgage released £85,000
Balancing deposit £95,000
Funds paid on completion day £180,000
Reside of own funds £155k - £20k - £95k = £40k.
Upto £40k can be paid to contractor, with any balance being paid from the released retention money, £50,000, on receipt from lender.
You also need to get your solicitor in to view the legal pack at the auctioneers asap.
thanks very helpfull
my builder who is a close friend and very good at his profession , 35 years experience , said the house is structurally sound
so if we instruct the bank to do the cheapest survey , would that go against our favour ?
and I suppose if the retention was massive we wouldnt loose approx £1k on a full structural survey ?0 -
The lender won't care what type of survey you choose. If the surveyor has any doubts when carrying out the lender's valuation he'll ask you to obtain specialist reports on the relevant issues - timber, damp, electrical, roofing etc. I would imagine you'll have these done anyway, as part of the renovation process.
Chances are, if you've had your builder round the property a couple of times you won't find anything unusual coming up on the valuation. If the surveyor feels there may be structural problems he'll recommend a structural engineer's report, regardless of whether you get a basic mortgage report or a more in-depth survey.
In this instance, I'd await the results of the valuation before I'd consider spending more money.I am a mortgage broker. You should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice. Please do not send PMs asking for one-to-one-advice, or representation.0 -
This discussion has been closed.
Confirm your email address to Create Threads and Reply

Categories
- All Categories
- 351K Banking & Borrowing
- 253.1K Reduce Debt & Boost Income
- 453.6K Spending & Discounts
- 244K Work, Benefits & Business
- 598.9K Mortgages, Homes & Bills
- 176.9K Life & Family
- 257.3K Travel & Transport
- 1.5M Hobbies & Leisure
- 16.1K Discuss & Feedback
- 37.6K Read-Only Boards