Mortgage retention - your knowledge is welcome!

HorseWhisperer

Hi all - happy Christmas in advance!


Just need a bit of background knowledge about mortgage retentions (I have read umpteen posts about this subject, but none actually answers my question)...


I am the vendor of a flat. My buyer has been told by her lender that there is a large mortgage retention relating to urgent works required, and specialist reports have been requested. Both myself and the buyer have had the specialist reports/quotes carried out and the buyer is in the process of submitting them to their lender's surveyor/lender, though its unlikely anyone will be looking at them until the New Year now. The quotes for remedial work are substantially less than the rentention, by 85%!


The buyer absolutely cannot find the extra cash required to bridge the gap between the mortgage offer and the sale price (i.e. the value of the retention).



I have agreed to pay for the works, just to get the sale moving, as they are a drop in the ocean compared to the retention and sale price. I have also agreed that the works can be carried out between exchange and completion to help with the buyers mortgage retention issue.


My questions are:
Would the surveyor/lender be likely to reduce the retention to the value of the works required, given there's such a big difference?
If they won't do that, does the buyer still have to find the full amount of the retention in cash when putting down their deposit, or, since the works will be carried out between completion and exchange, does this mean that she won't need to fund the difference as they will release the full mortgage applied for on completion?


Many thanks!

G_M

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kingstreet

HorseWhisperer wrote: »

Would the surveyor/lender be likely to reduce the retention to the value of the works required, given there's such a big difference?

Yes. It's just a suggested retention. If the actual work needed is trivial, the retention may well be removed altogether.

If they won't do that, does the buyer still have to find the full amount of the retention in cash when putting down their deposit, or, since the works will be carried out between completion and exchange, does this mean that she won't need to fund the difference as they will release the full mortgage applied for on completion?

If the work is done between exchange and completion, the retention will be removed on provision of receipts/guarantees.

However, the purchaser's solicitor may not be willing to exchange contracts under such circumstances. If the lender won't accept the evidence of the work done, their client would be in breach of contract if they are unable to complete.

HorseWhisperer

Thank you @kingstreet - that's put my mind at rest. Hopefully the buyer's solicitor will play ball!