Help regarding valuation, retention and extra reports!

upsizer

Hi

I've already posted on here about having to get a structural survey at the request of the bank.

To recap, we agreed to buy at 203k. The valuation came back at 200k with a 10k retention. It also requested a structural report be done on some seemingly historic movement and the status of a dilapidated outhouse.

We have had the report carried out and just waiting to receive it, though surveyor says all seems ok basically. Also, the vendor has agreed to drop sale price to 200k (ie the valuation price).

The thing which is bothering me is that when this first came about, the bank said they don't do retentions, so if the report comes back again saying that any works need to be done, I'm not sure where we wouild stand. I also don't get why the bank won't lend us based on the 200k valuation, especially as that now matches the price we are paying.

I feel as though I must be missing something. It doesn't make sense.

Until we get the report back to the bank next week, I won't know what the outcome is, but I would like to get my head around their 'system', so if anyone has any insight, I would love to hear it!

Thanks!

redapple1

Nightmare isn't it. Which bank might be useful to people on here?

Thrugelmir

upsizer wrote: »

I've already posted on here about having to get a structural survey at the request of the bank.

Given the Homebuyers report you've received. Its of benefit to you as well.

So there's no repair or remedial work necessary?

upsizer

Well, Thrugelmir, I agree that it's not a bad thing to have the additional info. We haven't had the written structural report yet, but I got an email summary saying that it all looked pretty much ok, that the internal cracks could be cosmetically repaired and that there is nominal, mainly historic movement to the outbuilding probably caused by leaking drainage softening the foundations over time (old clay pipes). No mention of remedial work in the brief overview.

If there is any remedial work to be done, it would most likely be to remove the outhouse which is fine as we would have probably done that anyway at some stage. What I don't know is on what basis the bank would agree to lend bearing in mind they don't do retentions?

Thrugelmir

upsizer wrote: »

What I don't know is on what basis the bank would agree to lend bearing in mind they don't do retentions?

If that's their policy then they won't offer you a mortgage.

Who is the lender?

holly_hobby

Hi again,

I posted on your other thread if you remember me ?

If the mge lender doesn't "do" retentions, this relates to future drawdown, and shouldn't mean that they don't offer at all. Indeed in this circumstance a full refusal would only occur if a full retention was applied by the surveyor (which is seen where there are severe remedial issues with a property, which from what you have said doesn't seem to be the case thankfully !).

Ordinarilly how retentions work is that the mge lender will reduce the initial released mge amt applied for, by the noted amount of retention indicated by the surveyor - giving the mortgagor the option of having the works completed and re-inspected within 6 mths of completion, if they do want the retained amount released (of which they also have the option not to apply for its release at all). The mortgagor may chose to request a re-inspection and retention release, if for example the funds used to service the repairs were from an emergency savings account, or obtained from another (ideally) temporary source.

In your case, where the lender doesn't "do" retentions, all that will mean is that you won't have leave to apply for its release/drawdown post completion of the noted works, as you may be able to do with an alternative lender.

So in the case of a partial retention, (assuming the Vendor doesn't complete the works pre completion with a re-inspection), all this means in your case is that in addition to the minimimum deposit reqd (either criteria wise or for the chosen product), you will also need to fund the shortfall amount between the reduced mge offered and the agreed pch price. (to which, it should also be noted that even if the Vendor reduces the pch price by the noted amount of retention, the retention will then be applied to the reduced pch figure, as it is in relation to essential repairs, which ultimately affects the lenders suriety if not completed and in the event of possession).

So, if your SE comes back with essential works, and a partial retention, and assuming that you have access to funds to cover the difference (and don't reqd future releasement/drawdown to balance the books), it won't be the end of the world - although your savings account will be a little lighter !

If however, you don't have the funds to cover the difference, and the Vendor won't do the works pre completion (with a re-inspection which will incur a fee)- it may well be a case of walking away I fear.

Wait and see what the survey brings ... we can then start hatching a plan !

Hope this helps

Holly

upsizer

Holly, I do indeed remember you, you have ben very helpful.

That was a great explanation, particularly the bit about the retention not being directly related to the sale price - it makes more sense now.

If we do need remedial work, then we'll have a bit of spare cash from the sale of our current house, but not a huge amount, so fingers crossed it won't be anything too awful.

I really appreciate you taking the time to go through al of that, thanks so much!

holly_hobby

Pleasure ..... glad it translated ok !!

So, don't panic or let it stress you right now ... lets see what happens with this survey and then we'll take it step by step from there .... x

H x

upsizer

That's so kind, I'm trying (but mostly failing) not to get stressed!!

upsizer

Just to update, got the full structural report yesterday and have sent to bank. There is no ongoing movement in the property which is great, but the report does recommend having the old outhouse removed.

Problem is, there are no costings given so not sure what the valuer will make of this. The saga continues I fear...

holly_hobby

Hi again,

Well thats fantasic news ... re the OHouse, if its a recommendation but not a condition, you'll be fine, and it shouldn't affect the offer.

If it is a condition, with a retention, you could liase with the vendors to see what can be done between you (splitting cost ?), then have it re-inspected pre completion to have the offer amended and any retention removed. Or not bother, and just fund the difference caused by the retention from your own funds.

If its a condition, but there is no retention reqd, then, you can complete as normal and just dismantle asap post completion.

Hope this helps

H