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Mortgage retention

Written By:
Myles Robinson - Expert Finance Advisor

Posted: Feb 13, 2023

Mortgage retention guide

You’re in the right place if you need advice about mortgage retention in the UK. This comprehensive guide covers all you need to know about the process of mortgage retention and how it affects a mortgage application.

We have a team of experienced mortgage brokers who specialise in this area. Call today to speak with an expert in mortgage retention advice. We have a few mortgage providers lending who we can introduce you with. We will ensure to match you with the mortgage lender to suit you.

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What is retention in a mortgage offer?

When a mortgage lender refuses immediate release of all mortgage funds to a customer, it is called mortgage retention. They may retain some capital until certain works are completed.

A surveyor who will carry out a mortgage retention survey will usually identify work that must be done before a mortgage lender retains a portion of a mortgage.

Reach out for mortgage advice when looking for a loan for a property purchase; our mortgage lenders will save you time and money and offer you the best deal on the mortgage market.

What type of work will cause mortgage retention?

Mortgage retention work is generally not required for minor repairs or aesthetic work. They tend to be reserved only for essential tasks. This will be explained when a mortgage retention survey is carried out.

What is a mortgage retention survey?

Surveyors will perform a valuation when you purchase a property. This allows them to determine the property’s value and compare it with the asking price. This will help you determine how much a mortgage provider will lend you.

Lenders may agree to the principle value, but they might decide to retain some funds and do mortgage retention once the survey is completed. They must ensure that the property provides sufficient security to support the loan and mortgage repayments

Speaking with an independent mortgage broker will make the application process less stressful.

What is a retention on a mortgage?

Although your lender is willing to lend you a £198,000 mortgage initially, they will only give you £190,000. This is called retention on the mortgage funds.

The remaining £8,000 will be retained until you have completed any electrical rewiring the lender considers necessary. The lender will then set a deadline to complete the work within six months after you move in.

After you have completed the rewiring, your lender will release the final £8,000.

Mortgage retention for damp

Mould and dampness are common reasons for mortgage retention. The severity of the problem will determine how much mortgage can be retained and what repairs are required.

Another reason a lender might choose to retain your funds is because of structural defects or electrical rewiring.

Things to Consider

Mortgage retentions are a problem because if you decide to go ahead with the purchase, you might have to make up the shortfall or find the funds to finish the work. Source money that might not be available.

You’ll likely have put the deposit towards your property purchase. If you are unable to negotiate with the buyer, or you don’t have the extra cash, it is possible to borrow money or use a credit card.

You should be able to repay the loan as soon as your mortgage retention has been released. However, be aware that early repayment fees (ERCs) may apply if you take out a loan.

Contact us if you are in this position and don’t know which option is best for you. We’ll arrange a no-obligation, free chat with a mortgage retention specialist alongside a mortgage broker.


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What is a 100% retention loan?

Sometimes, a surveyor may recommend that full mortgage retention be made until certain works have been completed. A structural engineer’s report is often required before a 100% retention can be issued.

Although this isn’t a common occurrence, it can happen if the property is in a very poor condition or is completely uninhabitable.

Full structural surveys are a smart idea for property purchases that are older or not-standardly constructed properties. They will alert you to potential problems before they become serious.

What options do I have in the case of total mortgage retention?

Your surveyor may recommend a 100% mortgage retention. If this is the case, you might be able either to withdraw your mortgage request or negotiate with your seller. The seller should accept this as a condition of any buyer and do the work.

It is strongly advised that you seek professional advice if your lender has placed full mortgage retention on you before you accept an offer on a property.


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Requirements to retain a mortgage

After a lender has completed an affordability evaluation and verified other factors, such as your credit score or employment status, they will review the legal searches and report.

If the valuation shows that work is required, an ‘offer to advance’ will be issued. This will state what conditions apply to the offer and whether the mortgage will remain.

The lender could either:

  • If the work is completed within a specified timeframe, you can offer to pay the entire mortgage amount.
  • You can only offer a portion of the loan initially, and the rest will be paid after the work is completed within a certain timeframe.
  • Instead of a report from a structural engineer, impose full mortgage retention

Before you can move on to the next stage, legal work, you must first accept the offer of an advance.

What makes mortgage retention in Scotland different from the rest of the UK, and how does it affect the quality of your loan?

It is the same north as the border. It is important to work with a specialist broker who knows the Scottish market.

If you are looking to purchase property in Northern Ireland or Wales, the same is true.


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What lenders can carry out mortgage retentions?

Every provider will have a different view on what is acceptable and unacceptable when authorising an application, as is often the case with mortgages.

Banks and building societies sometimes overlook suggested retentions less than a certain amount, such as £2,000.

These banks will overlook minor mortgage retentions at the point of writing…

  • All over the country
  • Natwest
  • Principality
  • Skipton
  • Leeds Building Society

Clydesdale Bank has stricter requirements for mortgage retention.

Lenders are always updating their lending criteria. Not all lenders release their eligibility criteria to the public.

These mortgage companies do not share this information in advance.

  • Santander
  • Halifax
  • Barclays
  • Kensington
  • Virgin Money
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Talk to an expert about mortgage retention advice

Contact us if you have additional questions or want to discuss your options for mortgage retention.

Our whole-of-market team includes experts who have specialist knowledge in structuring mortgage retention deals.

They can also provide strategic advice to clients who have been offered 100% retention mortgages.

Talking to one of these experts can help you find the best solution and save money on your mortgage.

Send us an email or contact us today. There is no fee and no obligation.


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