In this brief guide, we are going to discuss Mortgage retention, what it is and how it can affect you and your mortgage application.

What is Mortgage retention?

Mortgage retention is when a mortgage lender withholds some of the mortgage funds until changes which they have requested are made to the property. This would mean that you will need to find the funds which are being withheld by the mortgage lender to fund your mortgage. 

In some cases, this may mean you will have to renegotiate the property price, ask the seller to do the pending work, ask the seller for fund the amount being withheld by the mortgage lender or you will simply have to abandon the property purchase. 

If you choose to purchase the property you will also have to find the funds to do the work requested by the mortgage lender aside from funding the deficit in order to purchase the property.

A mortgage lender doesn’t always have to do mortgage retention In some cases the mortgage lender will simply give you the full mortgage amount but will request that some renovation work is done within a certain time frame.

What is a mortgage retention survey?

A mortgage retention survey is a survey which a mortgage lender carries out before they decide if a mortgage retention is needed.

The surveyor will usually suggest to the mortgage lender if they should retain any of the mortgage funds.

When do mortgage retentions occur?

A mortgage lender will usually insist on a mortgage retention if the mortgage valuation or property survey indicate that your property is valued less than the purchase price.

In some cases, the mortgage lender may see something mentioned in the property survey which puts the security on the mortgage (the property) at risk and this means they will insist on renovations to ensure before they will release all of the mortgage funds. This could be structural issues, woodworm, damp or even Japanese knotweed.

Once a mortgage lender carries out a mortgage valuation this doesn’t mean that they will necessarily approve your mortgage. In some circumstances, they will insist on mortgage retention if they want some changes to be made to the property before they release all of the mortgage funds.

What is a 100% retention mortgage?

A 100% retention mortgage is where the mortgage lender retains 100% of the mortgage funds until certain renovation works are done on the property.

How does mortgage retention work?

Mortgage retention could be insisted on when the mortgage lender carries outa property survey and the surveyor makes a note requesting that some of the mortgage funds are withheld until some renovation work is done. 

This ensures that the security on which the mortgage lender is providing a mortgage on is adequate in a scenario they had to do a home repossession.

An example of this could be if you wanted a mortgage for £200,000 but there are some structural issues which the surveyor reports and suggests that £10,000 is withheld until you have fixed the structural issues with the home.

In this case, the mortgage lender will withhold £10,000 from your mortgage but release all other mortgage funds. 

This means you will need to use money from your savings to pay the seller or renegotiate the sale price with the seller in order for you to complete on the property purchase.

The mortgage lender will then release the rest of the mortgage funds to you once you have confirmed the work they requested has been done and a surveyor has verified this.

Why do mortgage lenders retain some of the mortgage?

A mortgage lender will usually only retain some of the mortgage when a surveyor has suggested that a mortgage retention may be in the mortgage lenders interest.

Mortgage retentions will usually be requested when the work needed to be done is extensive such as roof work, structural work such as foundations, damp issues, asbestos, boiler or central heating issues, electrical work or other things such as Japanese Knotweed.

Doing the renovation

If a mortgage lender has insisted on a mortgage retention then you will need to do the renovation work. You must ensure you have the money for this or you will then need to use a loan to do the renovation work.

You can repay the loan with the funds which are released from the mortgage lender later on.

FAQs about Mortgage retention.

Below are some of the most commonly asked questions about mortgage retention

What is a retention in property?

A retention in a property is when a mortgage lender decides to retain some of the mortgage funds after the mortgage has completed.

Can you get a mortgage on a house that needs repairs?

Yes, you can get a mortgage on a house that needs repairs. Usuallythemortgage ender will give you a set timeframe to complete the work or the mortgage lender will retain some of the mortgage funds until the repairs are done.

What makes a house habitable for mortgage?

For a house to be habitable for a mortgage it will need to have a bathroom, a kitchen and a roof at the time of purchase.

In this brief guide, we discussed mortgage retention. If you have any questions please let us know below.

If you need financial advice and you live in the UK then you could contact the Money Advice service over the phone or via chat for impartial advice.

You can also contact the debt charity “Step Change” if you are in debt and need help.


John has 22 years of experience in financial services. This spans across financial research, financial services (As a qualified mortgage broker and underwriter), financial trading and sales at global investment banks. While working as a publishing research analyst, he covered European bank credit and advised institutional clients on investment strategies at both JP Morgan and Societe Generale. John has passed all three levels of the CFA (Chartered Financial Analyst) programme.

John has 22 years of experience in financial services. This spans across financial research, financial services (As a qualified mortgage broker and underwriter), financial trading and sales at global investment banks. While working as a publishing research analyst, he covered European bank credit and advised institutional clients on investment strategies at both JP Morgan and Societe Generale. John has passed all three levels of the CFA (Chartered Financial Analyst) programme.