Mortgage Retention Figures

Sleepy_2

Hello,

Please can someone who's good at Maths help me out with this one...

I recently got a 90% LTV remortgage with BM. The Valuer said that the house will be worth £300,000 but needs work so has put a current value of £285,000 with £15,000 retention until works completed.

*Figures are approx / rounded due to Fees *

The way I thought it would be is...
Value £300,000
Gross Advance £270,000
-Retention £15,000

---

= Net Advance £255,000
(then another £15,000 when works done = £270,000.

but, it has turned out like this....
Value £285,000
Gross Advance £256,000
-Retention £15,000

---

= Net Advance £241,000
(then the £15,000 Retention when works done = £256,000)

I spoke to a nice guy at BM who confirmed that they are happy with the £300,000 figure given by their Valuer, but advised that as the works were not done when the Remortgage was requested (obviously) then they could only Value at £285,000 then, and then accept that its £300,000 after work is completed.

I thought that the idea of a Retention was that too say that when 'x' amount of work is done, then the retention value of 'x' will be released, giving the full 'after works' valuation.

.... now I've confused myself!

Dan_Collins_2

OK, val for this will be £285,000 max LTV is 90% so max advance is 256,500. They have taken the 15k off of the valuation not the advance. The property will have to be re-inspected once work has been completed. What they should allow you to do is to draw down the 256.5k as that is 90% of the lower figure then when its worth 300k you should be able to draw the remaining 13.5k.

If I was you I would seek more info from BM. They are a good lender but it could be an error.

Sleepy_2

Thanks Dan..

I'm getting more confused with this

Are you saying that it appears that BM have taken the Retention figure off both the Valuation and the Advance?

When should they have taken the £15,000 Retention amount?

Many thanks for all help - I'm going bananas looking at these figures :think:

Dan_Collins_2

They have taken 15k from the property val and lent at 90% but then they have taken 15k off of the loan. if the property is worth 285k as it stands why retain 15k off of the mortgage, why not re inpect the propert and then lender the balance up to 90% of 300k.

Sleepy_2

I spoke to a few people at BM today for a couple of hours. Once I got past the "a retention amount of £15,000 will be given once the Valuer is happy with the works, thats why the amount is less £15,000" spiel I spoke to someone who shed a little more light.

This guy advised the brokers had initialled filled the application out asking for the 90% LTV product on a £300,000 Valuation (correct) - BUT the Brokers had "specified that the amount required to be borrowed was £256,000" - and then the retention of £15,000 was witheld from this amount.

I suggested that the Retention Amount would only have appeared after the Surveyor had visited, which is AFTER the initial Mortgage application. Therefore the Brokers could not have guessed that there would be a £15,000 retention on £300,000, value to £285,000 - then -10% = £256,000, but he was adamant the Brokers entered the figure £256,000 into the online system!

The guy at BM was very helpful and suggested that the Brokers should call him tomorrow, but was of the opinion that there probably wasnt anything that could be done about it now - the only way would be a "further borrowing".

I'll call the Brokers tomorrow, but does this sound right?, should I be asking any particular questions.

Thanks again for the help.

Dan_Collins_2

MMMM its possible they have an online system and the broker would have keyed your app. .You should have been given a copy of the application. If not ask for one as they cannot amended now, Has it completed?

Your broker should contact BM, if it has completed it may be to late, if not it should be able to be corrected. The broker needs to sort this for you now.

Good luck

Sleepy_2

Thanks Dan.

I spoke to the Brokers who are looking into this now, and will let me know soon.

I also managed to speak to the Valuer who advised that the retention was supposed to be placed on the £300,000 and not the £285,000 - and was even prepared to drop a line to BM to advise this.

Will let you know how this plays out.