Mortgage retention super problems

GMS

MORTGAGE_RETENTION_STRESS wrote: »

Yet the estate agent is adament that the previous 2 valuations had no clause at all, and the valuation of 119k was correct, it will be worth more once all works are done.

Must be true if the estate agents said!!

If so why did the sale not complete?

More likely to have said £0 value as is, £119k after works completed

MORTGAGE_RETENTION_STRESS

GMS wrote: »

Must be true if the estate agents said!!

If so why did the sale not complete?

More likely to have said £0 value as is, £119k after works completed

Oh trust me, i do doubt them very much! But this is my first attempt at a mortgage, so i'm very very new. And already bored of trying to read between the lines with the agents. It is so hard to know who to believe and where to go for next steps. I still keep coming back to, how can they say there is a retention, when they will not give a way for the money to come back to us on completion of works. Everything else i find about retentions is straightforward, it is only the amount that varies.

GMS

Ask the agent for copies of the previous 2 reports. Suggest they challenge your one on the basis of the other 2. It wouldn't make a blind bit of difference but it will call their bluff.

Ask which firm carried out the previous 2 and for which lender.

Also ask why it has not been sold already.

Have you actually seen the valuation report yourself?

Thrugelmir

MORTGAGE_RETENTION_STRESS wrote: »

It is bonkers isnt it? It isnt just me?

There's no guarantee that the kitchen/bathroom you install will add £7,500 of value. As to comply with the requirement both could be very basic.

MORTGAGE_RETENTION_STRESS

That is a good idea, but as you say, would make no difference - but i very much like the idea of calling their bluff.

We have seen our valuation report, just said kitchen/bathroom required, so retention of £7500. Our advisor got in touch with them and asked for more info - very informatively they replied:
kitchen/bathroom required.

Thanks.

All advice is indeed appreciated, im also just enjoying the tones in which the replies come - makes me feel less alone!

MORTGAGE_RETENTION_STRESS

Thrugelmir wrote: »

There's no guarantee that the kitchen/bathroom you install will add £7,500 of value. As to comply with the requirement both could be very basic.

The valuer has values at £111500 as it is, £119000 with the works done - so this is the information they are using, and as i understand it, how a retention works.

Dave_Ham

Seriously, do not get bogged down by this retention word. I would have told a client the house was virtually un-mortgageable given no kitchen and bathroom.

The Estate Agent is playing you, they too will even be surprised they have got away with this.

Forget the retention, if your advisor pushes too much someone more experienced may pull it all together given the report.

Take the product as is or walk away with the deal.

And as we sarcastically remark, never believe a word out of the Estate Agents mouth

kingstreet

If the property is valued at £111,500 your maximum mortgage is going to be a percentage of that, say 90% if that's the maximum for the product.

It looks like Nationwide hasn't bothered with the retention, it has simply taken the surveyor's downvalaution, so you can borrow 90% of the valuation as that is the lower figure (valuation or purchase price, whichever is the lower).

The only way you would get the valuation figure after essential repairs taken into account is if the work is done now, by the vendor, or by you between exchange and completion. Then you could continue to buy at £119k with your 90%? mortgage and the retention would not apply.

If the retention was applied as it stands, they would take £7,500 and hold it back from 90% of the £111,500 and give that back once the essentials were done, but you would have to buy for £111,500 and make up the retention with a temporary increase in your deposit by £7,500.

You really could have done with an experienced independent broker, not a lender "drone" who only parrots the employer's line...

MORTGAGE_RETENTION_STRESS

kingstreet wrote: »

If the retention was applied as it stands, they would take £7,500 and hold it back from 90% of the £111,500 and give that back once the essentials were done, but you would have to buy for £111,500 and make up the retention with a temporary increase in your deposit by £7,500.QUOTE]


This is the bit that they won't do. We'd been to a broker first, but he could only get us a mortgage of 83k, whereas Nationwide would go to 123k.

A further question, they told us in order to keep the same repayments as arranged, we will have to put the extra in (which is ok) but then,
we are borrowing less, putting a higher deposit - but the rates won't change, neither will our monthly repayments (????) - so wouldn't we be paying back an extortionate amount considering our deposit would be in excess of 20%?

Thank you for all the help.

kingstreet

What happens to the loan to value?

You may be borrowing the same amount over the same term, but if there's a change in loan to value it may be putting you into a different rate band.

EG

£100,000 on £120,000 = 83% and the rate is 4.5%.

£100,000 on £110,000 = 91% and the rate is 5.5%

In this example, you may still be paying £120k for the property, but following a downvaluation by the surveyor, the loan to value is based on the valuation, not the purchase price.

Are you asking the vendor for a price reduction to reflect the essential repairs needed? I know it doesn't help your immediate situation, but paying over the odds shouldn't come into it...