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In basic terms, mortgage retention relates to monies held back by the lender until certain mortgage conditions are satisfied. The retention on a mortgage will usually have been invoked as a result of the advice of the valuer, and comments that he has reported in his Basic Valuation for mortgage purposes.
Having a hard time getting to grips with Retention? 'Mortgage Retention' explained looks at how retention on a mortgage works, together with the implications mortgage retention may have. Finally, we look at how Shire Direct are in a position to help. So read on for the lowdown on Retention on a mortgage.
Table of Contents:
Well, as we mentioned briefly in the introduction, Mortgage Retention refers to funds held back by the Mortgage Lender until certain conditions on the mortgage have been satisfied.
In most instances, the retention on a mortgage will normally have been initiated upon the advice of the valuer, and the details he has reported upon in the Basic Valuation for mortgage purposes.
The valuation report will record property repairs or improvements that the valuer considers to be essential repairs, and will recommend an amount that he deems to be reflective of the cost of such remedial works.
Once the repairs have been undertaken, the lender will usually release the monies that have been subject to retention on the mortgage.
It's all very well having the text book explanation of mortgage retention, but in our view, explanations of this nature don't highlight the practical aspects and implications of being told that the lender is holding back, what can often be a large portion of the mortgage funding, especially in the case of those borrowers buying a property for the first time.
First-time home buyers do not usually have the luxury of a large mortgage deposit transferred from the profits of a previous property sale, and are therefore quite restricted in their options.
Indeed, many borrowers have the idea that if the lender imposes a retention on a mortgage of (say) £7,000 against remedial works to be undertaken, that the property has been valued at £7,000 less than the agreed price, and that the solution is to just negotiate a reduction in the purchase price by £7,000.
This is not so. The lender will insist that the remedial works are satisfactorily completed before they will release the full mortgage monies. Until that time, they will hold back their retention on the mortgage of £7,000. Sometimes borrowers have obtained quotations for the required works, often at a substantially lower price than the valuer has suggested. When challenged, the lender can only refer these to the valuer for his consideration, and in practice, the valuer will rarely budge.
In practise, most first-time buyers, would have little chance of shelling out a further £7,000 in addition to their deposit, stamp duty, solicitors costs and fees, and will therefore have little option but to explain the situation to the vendor, and to try to get them to undertake the works prior to completion so that the purchase may proceed at the agreed price.
Finally, it should be remembered that the lender will have to instruct the valuer to re-inspect the property to confirm the remedial works have been properly undertaken. And of course for this, the purchaser will have to pay the valuer a re-inspection fee!
Yes, no problem!
Our extensive portfolio of lenders and schemes accommodate this type of situation. Some schemes are specifically designed to provide additional amounts of up to £30,000 beyond the purchase price, and are ideal for borrowers who would like to:
Remember our qualified mortgage advisors are available until 10pm everyday on Freephone 08000 282 281 to discuss the options open to you. Alternatively, you can also enquire online at any time. Naturally, we'll carefully assess your circumstances, needs, requirements and aspirations and come up with the most appropriate solution for you.
We are certain that you will find our service and approach to be friendly, yet professional, helpful and not the slightest bit stuffy. So, please don't hesitate to Contact Us if you would like to discuss your requirements, and we'll be delighted to provide you with an in-principle decision - whatever your circumstances and naturally without obligation!
So, we hope we've been able to explain Mortgage Retention and how retention on a mortgage works and it's implications to your satisfaction. Remember, there is a wealth of mortgage related information throughout this website, so why not take some time out to explore the options and possibilities that may be available to you, and don't forget we're only ever a free telephone call or couple of mouse clicks away and would love to hear from you!
The overall cost for comparison is 9.8% APR.
The actual rate available will depend upon your circumstances. Ask for a personalised illustration. APR variable and based on a usual case. Most customers are likely to receive a lower rate or the same rate as our overall cost for comparison rate - learn more about APR.
There are no upfront broker fees.
However, a fee may be charged on successful completion. An indication is that on conforming cases (straightforward applications with no or minimal adverse credit) a fee may be charged of up to 1% of the amount advanced, typically £795 and will depend on your circumstances.
For non-conforming cases (where case research and processing may be more complex due to adverse credit or unusual circumstances), a fee may be charged of up to 3% of the amount advanced, typically £1,995.
THINK CAREFULLY BEFORE
SECURING OTHER DEBTS AGAINST YOUR HOME.
YOUR HOME MAY BE REPOSSESSED
IF YOU DO NOT KEEP UP REPAYMENTS ON A MORTGAGE OR ANY OTHER DEBT SECURED ON IT.
Adding existing debt to your mortgage will increase the repayment term and overall cost.
Are you worried and becoming stressed because you are having problems getting a mortgage or remortgage? Worry and stress no more! Here at Shire Direct we provide tailor made mortgage solutions to suit you, and can usually help with all kinds of circumstances including...
Remember, we're here to help, and would love to hear from you!
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