Lender undervalued property


We’re currently in the process of buying our first home. Last week the house was surveyed by the lender and on the basis of the report they are not prepared to lend us the full amount required. The report states £10 000 worth of improvements are required to the house therefore they have knocked this of their valuation. Should this work be done to a satisfactory standard the new value would meet our original offer.

The lender has, therefore, knocked £10 000 off the amount they are prepared to lend us but also require a £10 000 retainer until the work is complete.

As I understand it this means:

1. We need to make up the shortfall in the mortgage based on the £10 000 difference
2. Pay a £10000 retainer
3. Find £10000 to complete the work in order to release our retainer

Does this seem right? It seems like we are being hit twice?

Thanks for your advice


  • Typhoon2000Typhoon2000 Forumite
    1.1K Posts
    Part of the Furniture 1,000 Posts Combo Breaker
    Normally it means they will offer you £10k less. If the work is done they will lend an extra £10k. No obligation to do the work.
  • They have undervalued nothing.

    Just saying.
  • amnblogamnblog Forumite
    12.1K Posts
    Ninth Anniversary 10,000 Posts Name Dropper Photogenic
    The valuer has alerted you to the fact that £10,000 needs to be spent on the property before they would consider it to be worth what you had intended to pay for it.

    That is the key issue here.

    If you want this property you need to reconsider in light of this and re-offer £10,000 lower minimum.
    I am a Mortgage Broker

    You should note that this site doesn't check my status as a Mortgage Broker, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.
  • Yes, we've revised our offer to reflect this but so far not got anywhere. Mortgage company requires several surveys and costings and they may reduce the retainer. These are now being undertaken so we'll see where we get to. Thanks for your help.
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