What to do if your bank holds back some of your loan as a ‘retention’

Mortgage lenders’ valuation report forms typically include a box labelled ‘Essential Repairs’ that the valuation Surveyor has to fill in.

Depending on the condition of the property, and the attitude of the surveyor writing the report, this may include one or two expensive-sounding repairs along with a recommendation to keep a hefty retention of a few thousand pounds.

The extent to which such issues are flagged up will also very much depend on which mortgage lender you’re using – some intensely dislike retentions, others positively encourage them. As a rule, the bigger High Street names tend to be more relaxed in their approach than small ‘daytime TV lenders’.

At the end of the day it’s up to the bank’s underwriters whether they keep a retention, by ‘holding back’ part of your loan.

If they decide to impose this on you, a sum of between £1,000 and £5,000 is normally retained until repairs identified in the report have been done or specialist reports obtained, whereupon a re-inspection by the surveyor may be instructed. In practice lenders rarely bother to check, and may release the funds upon receipt of an estimate for repair works.

The rationale for this approach is that any unless major defects are urgently dealt with they could end up being neglected for many years, seriously reducing the value of the bank’s security – ie the property you’re buying. But in reality this is slightly strange way of doing business, since by keeping back a few thousand pounds for the cost of repairing a flat roof the lender is withholding the money that you may well need to pay for the works!

Some more enlightened lenders will simply require an ‘undertaking’ – a written promise that you will sort out the listed repairs. Otherwise you could perhaps bridge the cost by paying for the repairs on your credit card and then immediately apply for the retention to be released before the card payment is due – although obviously this depends on getting the timing right.


Our next blog – coming soon …….

What if your survey finds serious defects?


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