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help with understanding mortgage retention!!(8 Posts)
Hi, we are second time buyers and put in an offer of a house we liked for the FULL ASKING PRICE. Had homebuyers survey done and although there were numerous recommendations of work to be done, the surveyor still valued the property at the asking price. we considered get a quote for the more 'urgent' works+asking the vendor to drop by this amount. However, after much consideration we decided that we would rather not quibble over a few thousand pounds and that in the grand scheme of things we would rather just get things moving. Unfortunately, the bank (who have had their own survey done for mortgage purposes)have decided that the house is worth 1.5k less than what it was on sale for. They say that repairs are recommended as a condition of the mortage and that the recommended retention is £1, 500. This puts us in a bit of a predicament....although we weren't going to quibble before now that we won't have the full mortgage we thought we were getting we will have to either a.find the money ourselves or b.ask the vendor to drop the price by this amount or c.get this work done......
My question is have you been in a similar situation and what would you advise? I know from searching on here and googling the subject that this amount is small fry compared to what other people are experiencing....BUT what with solicitors mounting fees, estate agents fee, stamp duty, removal costs and god knows what else, even if we could squeeeeeeze this amount out of our budget this would leave us with little or no money to have the works done that will eventually need doing (condition of the mortgage or not!)
sorry this is so long but any kind of advice would be gratefully recieved. Thanks
ps-whats really annoying is that what the banks surveyor is recommending needs doing is different to what our homebuyers report came up with. They want the chimney stack rebuilding and a damp report/damp works carried out but these were not high priorities on the homebuyers survey. The things he said needed doing urgently (including wall ties) were not picked up on by the banks surveyor?! Surely this just proves that valuations are very subjective?
Personally I'd go to the vendor and ask them to reduce the price. If they won't then it's up to you. Were you going to pay the mortgage fees upfront? If so, you could add them onto the mortgage thereby freeing up some of your cash savings to pay for the work to be done?
Reducing the price may not help - this would have to be disclosed to mortgage co who will prob just reduce the mortgage advance but the same amount as the reduction.
You could try an allowance from the sellers but again this has to be disclosed to the mortgage company who may just reduce the advance.
Your solicitor is obliged to report to the mortgage company or risks being struck off the panel.
Can you borrow off a family member and then repay once the retained funds come through?
Rac my understanding of the OP's situation is (for example) house is priced at £100k. Mortgage company feel it is only worth £90k without the work being done, therefore are only willing to lend based on that amount minus deposit. If the seller reduces to £90k the problem is gone, however if the seller refuses, the bank will still only lend based on £90k so OP will have to find the £10k shortfall elsewhere.
thank you for all your replies. My mortgage broker has now come back to me and said Abbey say there is no retention?!! What? why send me a valuation saying there is then? (they definitely did but unless its the recommendedpart on the behalf of their surveyor that they are choosing to ignore?) completely confusing! No wonder there are so many hold ups with house sales!
Thanks again all
As a property solicitor when I was in practice and doing conveyancing this came up quite a bit.
I suspect even if there is a price chip they will want the work done and make a retention to ensure that the property is adequate security. All the mortgage co care about is that the house is good security and sellable if anything goes wrong. They want the work done if it was a value issue the surveyor would have down valued - they are different.
It was usually a nightmare as a price chip didn't work as the mortgage co would usually reduce the advance. They have strict LTV criteria so if you are at the threshold of that and you knock for example 10k off the price but want the same loan amount, which is what you are saying so that the work can be done, you change the LTV and they won't offer the full advance.
OP speak to your solicitor they will have received your mortgage offer with their instructions and that it was they need to go by.
thank you. the small print said there was no retention but the surveyors report said there was. i should have read the small print! They dont make things easy do they?!
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