Renegotiate after retention original loan amount?

scriblesvurt

Hello,

If I am buying a house for 130k and I get a retention of 3k for works. I then get the seller to reduce the sale price to 127k to cover the cost of works, do I still get the original loan amount from the Mortgage company? Obviously the 3k back after proof the work has been completed. Or will they only then lend the 127k?

Thanks.

Thrugelmir

Your mortgage offer will be based on the purchase price, i.e. £127k.

kingstreet

scriblesvurt wrote: »

Hello,

If I am buying a house for 130k and I get a retention of 3k for works. I then get the seller to reduce the sale price to 127k to cover the cost of works, do I still get the original loan amount from the Mortgage company? Obviously the 3k back after proof the work has been completed. Or will they only then lend the 127k?

Thanks.

You haven't actually told us the mortgage amount, or your loan to value. Assuming you're taking a 90% mortgage, this is what was going to happen, and what will now happen;-

Originally - £130k purchase, £117k mortgage, £13k deposit.

With a £3k retention and £3k price reduction;-

Now - £127k purchase, £114,300 mortgage - £3k retention = £111,300 released at completion, so deposit needs to be £15,700.

£3k retention will be lifted and funds released on completion of works upto 6 months after completion.

scriblesvurt

Actual figures:

Original purchase: 120k 80% LTV So 96k loan 24k deposit.
Looks like a 3k retention.

So at original purchase price we will need a 27k deposit to still buy at 120k, then once the works are done we get the 3k back from the Mort. Either way we are out of pocket 3k? Grim.