Retention - I don't really understand

moneyshoe

Hi everyone,

We really like a property in Scotland which is being marketed at offers over £240,000. It has some problems with damp and a very dodgy extension so the homebuyers report recommends a retention of £50,000. This is ok we think it will be worth doing the work on but I'm a bit confused about how things would work.

We have a mortgage offer from RBS but this was for another specific property so we would probably want to go with nationwide. The homebuyers report doesn't list specific things that need to be done - it just gives lots of 2's and 3's and then suggests the £50,000 retention. How would we know what we needed to do to release the funds? Do you get quotes before purchase that set the exact figure of the retention or do they go with the surveyors figure? Will some lenders simply not lend on a property with a retention? I would be so grateful if somebody could explain the machinations. We are not taking the level of work needed lightly but at the moment it's the finance situation that's giving me a headache.

Thrugelmir

Are you sure it's £50k? That's very high for a retention. :eek:

amnblog

Speak to the valuer/ surveyor and they will advise you what needs to be done.

bigadaj

Retention is effectively taken off the borrowing so say the house is 240k, and you have a 10% deposit then you need to borrow 216k. The retention is then Taken off that so you would only be given 156k and you would have to finance the difference, this would be released when the work was done. However you would have to have 74k in this scenario, so would only work if you had a very large deposit really.

WellKnownSid

Thrugelmir wrote: »

Are you sure it's £50k? That's very high for a retention. :eek:

We recently looked at a house valued at £140,000 where the valuer recommended a £140,000 mortgage retention!

amnblog

WellKnownSid wrote: »

We recently looked at a house valued at £140,000 where the valuer recommended a £140,000 mortgage retention!

They do this where the property is not mortgageable in its current condition.

moneyshoe

It is definitely for £50,000 the extension is of non standard construction and all the floors are springy so I can well believe it will take £50,000 to fix.

We have a deposit of £150,000 so cash flow not a problem. Because we are in Scotland the homebuyers report has already been done and paid for by the vendor - is it O.K to phone up the surveyor and start asking questions since we aren't the ones paying them?

Thrugelmir

Arrange your own full survey if the property is seriously of interest and you are not daunted by the work required.

holly_hobby

bigadaj wrote: »

*, this would be released when the work was done.

Point to note is if completed and re-inspected within 6 mths, the retention will ve released without further status checks - however in excess of 6 mths, it will be treated as a further advance, and you will be subject to underwriting and status verification .... just something to bear in mind.

Hope this helps

Holly