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Mortgage Retention

What does mortgage retention mean and how could it affect your mortgage application? Find out here

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By Pete Mugleston  | Mortgage Advisor Pete has been a mortgage advisor for over 10 years, and is regularly cited in both trade and national press.

Updated: 19th August 2019 *

If you’re seeking advice on mortgage retention in the UK, you’re in luck. We’ve put together this comprehensive guide which covers everything you need to know about mortgage retention, how it works and how it can affect an application.

In this article,we’ll be covering:

What’s more, we work with an experienced team of brokers, some of whom specialise in this area. If you’d like to speak to an expert for mortgage retention advice, make an online enquiry or call us on 0808 189 2301.

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What is a retention on a mortgage offer?

In the most simplistic terms, mortgage retention refers to your lender refusing to release the entire mortgage funds to you straight away. They retain some of the money until certain works are carried out.

What is a mortgage retention survey?

When you buy a property, surveyors will carry out a valuation to see how much they think the property is worth and if it matches the asking price. This helps dictate how much a mortgage provider will agree to lend you.

While lenders may agree the value in principle, they might decide on a mortgage retention after the survey has been carried out, and retain some funds pending further work. After all, they have to make sure the property is adequate security for the loan.

How does a retention on a mortgage work?

Your lender agrees to lend you a £198,000 mortgage, but is only willing to grant you £190,000 initially. This would be described as retention on a mortgage.

The other £8,000 is being retained until you’ve carried out some electrical rewiring that the lender deems necessary. The lender then sets a deadline for the works to be completed within six months of you moving in.

Once you’ve completed the rewiring, the lender releases the final £8,000 to you.

Things to consider

The main issue when it comes to mortgage retentions is that, if you decide to proceed with the purchase, you may have to make up the shortfall and find the funds to complete the works, i.e. source money that may not be readily available.

If you’re buying a property, the likelihood is that you’ve put as much cash as you can towards the deposit. So in the event of mortgage retention, unless you’re able to negotiate with the buyer or have extra cash available, you may have to take out a loan or rely on a credit card or overdraft.

Of course, as soon as the mortgage retention is released, you should be able to quickly repay any finance, but beware that you may be subject to early repayment charges (ERC) if you opt for a loan.

If you find yourself in this situation and are not sure which is the most financially viable option for your situation is, you can contact us and we’ll set up a free, no-obligation chat with a mortgage retention specialist.

What is a 100% retention mortgage?

Sometimes, a surveyor will recommend that a full mortgage retention is made until certain works are completed. More often than not, a 100% retention is issued pending a structural engineer’s report.

This is not particularly common, but may occur if you are looking to buy a property that has significant defects or is deemed completely uninhabitable in its current state.

This is why full structural surveys can be a good idea, especially if you’re buying an old or non-standard construction property, to alert you to any potential problems which a standard valuation may not pick up on before completion.

What are my options in the event of full mortgage retention?

If your surveyor recommends a 100% mortgage retention, you may be able to withdraw your application, or negotiate with the seller. Ideally, the seller will accept that this will be the case for any buyer, and carry out the work themselves.

If your lender has imposed a full mortgage retention before you’ve accepted an offer on a property, it’s strongly recommended that you seek expert advice before proceeding with your purchase. 


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Requirements for a mortgage retention

Once a lender has carried out an affordability assessment and checked other factors such as your credit history and employment status, they will review the results of legal searches and valuation report.

If the valuation indicates that works need to be carried out, it is at this point when ‘offer of advance’ will be issued, stating what condition(s) apply to the offer and whether any of the mortgage will be retained. The lender may either:

  • Offer to provide the full mortgage sum when you purchase the property, provided the work is carried out within a certain timeframe.
  • Offer only part of the loan initially, with an agreement that the remainder will be paid when the work has been carried out within a particular time frame.
  • Impose a full mortgage retention pending a structural engineer’s report.

If you wish to proceed with the mortgage application process, you must accept the offer of advance and agree to the terms outlined by the lender before you can proceed to the next stage: legal work.

Is mortgage retention in Scotland any different to the rest of the UK?

It works much the same way north of the border. The only thing you should take note of is that you should work with a specialist broker who has specific knowledge of the Scottish market. 

The same applies in Wales and Northern Ireland, so again, speak to an expert with detailed knowledge of those regions if you’re hoping to buy there.

Make an enquiry and we’ll introduce you to one for free.

Why are mortgage offers with retention made?

A lender will only usually retain part of a mortgage because the surveyor has identified some aspect of work that needs to be carried out before the property is brought up to the stated value.

Generally speaking, mortgage retentions are not imposed for minor repairs or aesthetic or decorative work, as they tend to be reserved for essential works.

Mortgage retention for damp

A common reason for mortgage retention is due to damp and mould. How much mortgage will be retained and what work is required to rectify will completely depend on the severity of the issue.

Other common reasons a lender may choose to retain some of your funds are because of structural defects, electrical rewiring, boiler and central heating repairs, roof fixes, asbestos removal or Japanese knotweed elimination.

Which lenders impose mortgage offer retention?

As is so often the case when it comes to mortgages, every provider will have a different stance on what is or isn’t acceptable when it comes to authorising an application.

Some banks and building societies are willing to overlook small suggested retentions provided that they are below a certain figure, for example £2,000 or less.

The following banks are willing to overlook ‘minor’ mortgage retentions at the time of writing…

  • Nationwide
  • Natwest
  • Principality
  • Skipton
  • Leeds Building Society

Others, such as Clydesdale Bank, have far stricter mortgage retention requirements.

Mortgage providers are constantly updating their lending criteria, and not every lender releases their eligibility criteria to the general public. The following mortgage providers do not disclose their this information in advance…

  • Santander
  • Halifax
  • Barclays
  • Kensington
  • Virgin Money

Others, such as Clydesdale Bank, have far stricter mortgage retention requirements.

Mortgage providers are constantly updating their lending criteria, and not every lender releases their eligibility criteria to the general public. The following mortgage providers do not disclose their this information in advance…

  • Santander
  • Halifax
  • Barclays
  • Kensington
  • Virgin Money


We’ll find the perfect mortgage expert for you - for free

Save time and money with the right mortgage advice, first time

  • Network of over 200 brokers all with whole of market coverage
  • Save up to £400 per year with a mortgage expert matched to you
  • We've helped over 92,000 people get the right advice
  • Our quick & easy form only takes a couple of minutes to complete

Speak to an expert for mortgage retention advice

If you have any more questions on this topic, or to discuss your mortgage retention options, don’t hesitate to contact us.

We work with a team of whole-of-market experts, some of whom have specialist knowledge in arranging mortgage retention deals, and can deliver strategic advice if you’ve been offered a mortgage on 100% retention. Speaking to one of them can help you find the best solution, and potentially save time and money on your mortgage.

Make an online enquiry or give us a call on 0808 189 2301. We don’t charge a fee, and there is absolutely no obligation on your part. 

Updated: 19th August 2019
OnlineMortgageAdvisor 2019 ©

FCA disclaimer

*Based on our research, the content contained in this article is accurate as of most recent time of writing. Lender criteria and policies change regularly so speak to one of the advisors we work with to confirm the most accurate up to date information. The info on the site is not tailored advice to each individual reader, and as such does not constitute financial advice. All advisors working with us are fully qualified to provide mortgage advice and work only for firms who are authorised and regulated by the Financial Conduct Authority. They will offer any advice specific to you and your needs. Some types of buy to let mortgages are not regulated by the FCA. Think carefully before securing other debts against your home. As a mortgage is secured against your home, it may be repossessed if you do not keep up with repayments on your mortgage. Equity released from your home will also be secured against it.

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