Retention on a BTL mortgage

by Readers Question

8:25 AM, 23rd January 2015
About 4 years ago

Retention on a BTL mortgage

Make Text Bigger
Retention on a BTL mortgage

I am purchasing a house for £50,000 and the surveyor has reported it requires a roof contractor to inspect and repair/renew roof. Specialist to check all subfloor timber and internal dampness.

The House is now valued at £45000 until works done then £50,000 on completion. The lender has given a full retention and the agent has suggested we ask the seller to drop the price to £45000 to continue, but lenders min is £50k.

The agent now suggested my only option now is for me to get contractors in to quote to do work then once done reinspected by mortgage company to continue. I don’t have the funds to buy cash as tied up in 2 other properties I own on BTL

Is this common and realistically should I pay for works when I don’t own the house yet. The roof had some slipped slate tiles and the damp I’m aware of in room but contractors will diagnose expensive treatment I imagine. Who is qualified to carry out these inspections to lenders satisfaction.

Many thanks.

Benretention



Comments

Neil Patterson

8:34 AM, 23rd January 2015
About 4 years ago

Hi Ben,

First of all I would not spend any money repairing a property you do not own. I have seen this go wrong before and the sale not complete after.

You will continue to have retention issues with any lender even if purchasing at £45,000 as they are worried about the integrity of their security not just the purchase price. The next step would be to get specialist reports done indicating the amount and cost of work required. This can then be given to the lender and if the works are only minor they may reconsider the full retention. The surveyor should be able to recommend professionals to do this.

This may however cost you a small amount upfront and you still may not be able to proceed if it is bad news.

If you are on a tight budget and borrowing the maximum LTV at some point you need to make the decision to walk away if the property is not right for your circumstances. There are always more opportunities around the corner.

Jireh Homes

14:31 PM, 23rd January 2015
About 4 years ago

Hi Ben - support comments from Neil. You may be able to negotiate a lower retention if you obtain actual quotes but do not build up your hopes. Mortgage Lenders being much tighter at present. More likely the roof and damp work will be less than estimated, although you may need to seek a few quotes to find the lowest prices, which during the sale process can be difficult to arrange but can if the first quotes not too bad then chase further quotes once you have possession. Bluntly if you do not have the funds (or able / willing to obtain a short term loan) to carry out the remedial work you will need to walk away. Allan

ben whitley

15:51 PM, 23rd January 2015
About 4 years ago

Thanks for advice lender wants remedial work done and inspected prior to lifting the full retention. Only way I see now is to get a free damp and timber quote and roof quote and see if vender would do works to carry on at least it won't cost me anything to try, I imagine he'd rather drop it another 5gs and have a cash buyer snap his hand off. Expensive Lesson learnt damp house and btl mortgage not good. Which is a pity as most houses in grimsby around this price range have some form of damp. I'm thinking I should consolidate my money to buy house first cash do up remortgage and so on instead..

Jireh Homes

18:52 PM, 24th January 2015
About 4 years ago

Reply to the comment left by "ben whitley" at "23/01/2015 - 15:51":

Hi Ben - do not be put off, as many older houses do have damp. The issue is the perceived extent and attitude of the Lender. Often the damp is minor and there is no retention. Or it could be major in which case the Lender may decline to loan if considered not immediately habitable. Assuming you do not hit this obstacle, then solution is to have cash reserves to carry out the work, which you should have for any other work such as upgrading fire alarms, EICR and Gas Safety Checks etc. Allan

ben whitley

10:16 AM, 23rd May 2015
About 4 years ago

For anyone coming across this I listened to what neil and allen had said and walked away lost a few hundred quid in fees however around the corner has come an excellent property with none of the issues before and am very happy to have walked now. Thanks for comments

Neil Patterson

6:24 AM, 24th May 2015
About 4 years ago

Reply to the comment left by "ben whitley" at "23/05/2015 - 10:16":

Good call Ben 🙂

Jireh Homes

11:09 AM, 25th May 2015
About 4 years ago

Thanks Ben for updating on status and very glad this has worked out for you. It is great when folk respond with an outcome following a question posted on a portal. Allan


Leave Comments

Please Log-In OR Become a member to reply to comments or subscribe to new comment notifications.

Forgotten your password?

OR

BECOME A MEMBER

44% of landlords fear Right to Rent

The Landlords Union

Become a Member, it's FREE

Our mission is to facilitate the sharing of best practice amongst UK landlords, tenants and letting agents

Learn More