Mortgage suggested retention

[Syc4moreTrees]

Can any wise MN'er explain mortgage retentions to me?

The valuation said something about electrics etc and suggested a retention of £2000, but the mortgage documents still show as lending the full amount...so is there a retention or not?

Sorry to be so dim!

I used to work for mortgage company.
A retention is an ammount of money they will withhold until you have completed work.

if they say you need work done they will release all money except the £2000 and then when you send proof work has been done they will give it to you.

some of our customers would never provide proof that work was done and just fund the shortfall themselves from other sources, however if they said 'X needs doing' and you choose not to do it and later have issues they can say they have no responsibility to help you as you was aware of an issue up front

i have dealt with retentions as high as £60k which have meant sales fall through.
If you can get works done before you move in they will see proof and refer it to the surveyor and release it on completion.

ohh thanks Curly, I didn't know if i was being a bit dim!.

So basically they say they are lending me 10K (to keep numbers simple) but will actually only release 8K on completion date?

yes, and then when work is done you show them and they give you the other £2

You might be best to ask the mortgage company if they are going to keep any money back at all - we had a similar note on a house survey (I can't even remember how much it was, just a couple of thousand I think) and when I rang them, because our loan-to-value ratio was not high they were not actually going to deduct any money at all from the agreed amount.

So say the house was worth £60K, we'd asked for £40K and the work needed was £2K - they still gave us £40K on completion (not £38K).

It made little sense at the time, but it was a long time ago so things may have changed. I'd speak to them to make sure.