Can someone please tell us how a retnetion works on a mortgage? U will not believe this!!!?

Question

So, me and my fiance have been purchasing his fathers house, as a gift of deed, for less than a third of the property price! (Lucky we know)! Basically its £170k and we're buying it for £50k, because he doesn't want it no more and cant afford the upkeep, and as my fiance is the only child, we said we'd take it off his hands for some cash.
Anyways we've been going through the motions for 18months and its a joke now. The valuer came around and told the mortgage company to put a rentention on the figure of 10k until both me and my partner got some odd jobs sorted out.
My question is this. How can a rentention be put in force against the seller, if it is us that are getting the work done? Surely it can only be put in place if we were getting it remortgaged? They're gonna keep 10k from the 50k until we've fixed it up! Its worth 3x the amount anyways!!!! Someone PLEASE PLEASE help us cos we're going out of our minds!!!!!

Ok so for those who don't understand, it matters as to who owns the house as to who pays the mortgage.
The issue that we have is that they will be with-holding the money from my father in law, when its his cash from the sale of the house. He wont live there anymore, but he will only get £40k instead of £50k from a property that has been valued at £170k!! How can he be cut short, if the deal is that we get the work done or he doesn't get his cash??? How can he be peanlised for us getting work done, wehn all he is doing is selling the property on. Would it still happen if it was on the market? Does not make sense.
The work to be done is the guttering and fix some slates on the roof, very small jobs, as we have the valuation report here with us!
And by the way we ARE MORE THAN GRATEFUL!

The value of the property is £170k as it stands, already determined by the surveyors! But thanks for the sarcastic remark! The previous mortage is an interest only mortage of £22k from 20years ago. He is selling it to us at an UNDERVALUE in order to be rid of it, like i mentioned earlier. We are settling the old mortage and then he will take the rest of the cash! Simple enough???

PLEASE CAN PEOPLE NOT BE RUDE WHEN RESPONDING TO THIS QUESTION? iVE HAD 3 ANSWERS SO FAR AND 2 HAVE BEEN PERSONAL ATTACKS! I WOULD LIKE SOME PROPER ADVICE ON SOMETHING WE'RE HAVING DIFFICULTY WITH. PLEASE, THANKYOU!

Answer 1

I'm going back a few years, but we had a retention put on the property we wanted to buy. When we priced up the jobs we got a builder to do the jobs much cheaper than the retention price. We got the jobs done, showed the receipts to prove works finished (not sure now if they did come back out and inspect work - think perhaps they did). We borrowed the 'missing' money from a relative to complete the sale, got the jobs done with some of our own money, then the relative was paid back when the retention money came through. In effect you are short twice, the money they withhold and paying out to get jobs done. But the lenders want to make sure the house would sell if you defaulted, so the jobs must be quite important to be done.

Answer 2

If you are all a big happy family what does it matter who owns it? Get the odd jobs done (more than 'odd' if £10k's worth!) while he is in there and be bloody grateful you were lucky enough to be in this situation!

When you have made the repairs he will get the money, it's that simple. You are the one being penalised as you are not being granted the full amount, he is a third party in this and he is not a consideration of the mortgage company that you are trying to borrow from.

It's not a personal attack as you suggest but just a FACT!

I hear what you're saying about value of the property to value of the mortgage, perhaps try another mortgage company as the plot alone should be worth £50k.

Answer 3

You are buying this house with a 100% mortgage - the important figure is what you are paying for the house, not what its worth. The lender is lending you 100% of the purchase price of the house and so, in their eyes, you are a risk. The retention is not meant to 'punish' the vendor, but to ensure that the property which the lender is investing their money in is saleable should you default on the mortgage. This situation often happens and has nothing to do with the fact that you are purchasing from a relative.

Answer 4

I have no clue where you get the 170k value, and you don't mention the amount of the EXISTING mortgage. Based on what the valuer recommended, they believe that until the repairs are complete, the house is NOT worth enough to guarantee the mortgage company gets paid if they have to foreclose. What you are describing is neither a gift NOR a sale. Based on that, I doubt YOU have a clue.

Answer 5

You don't go into enough detail, but £10k is a lot of work. Like underpinning, or re-roofing; jobs that if aren't done make the property worthless.

Play their game. You have no choice.

Edit: In the real world, YOU and your FIANCE would have to find the extra £10k to pay to the vendor. You only percieve this to be in force against your father-in-law because he's a relative.

Once you had completed the work, that £10k would then be added to your mortgage

Answer 6

Usually when you get your mortgage offer through it will state in the conditions of the offer that all works specified as part of the retention are carried out before the completion of the sale, it may be that you only need to get some reports carried out to show that the house is sound.