Mortgage Declined Because Valuation Included a Retention
Mortgage declined due to retention is a situation many buyers face after a property valuation, particularly when repairs or defects are identified. While a retention can feel like a hard stop, it usually reflects property condition rather than borrower affordability.
What Does It Mean When a Valuation Includes a Retention?
A retention occurs when the lender’s valuer confirms the property value but decides to hold back part of the mortgage funds until specific issues are repaired.
In simple terms, the lender is saying the property is worth the agreed amount once essential work is completed, but not in its current condition.
How a retention works in practice
For example, if a property is valued at £200,000 and the lender applies a £20,000 retention, they may only release funds based on £180,000. The retained amount is usually released later once repairs are signed off.
Why Would a Valuer Recommend a Retention?
Retentions are usually linked to issues that could affect the property’s long-term condition, safety, or resale value.
Common reasons for a valuation retention
Valuers commonly recommend retentions for issues such as:
• Structural movement or signs of subsidence
• Roof defects or missing tiles
• Damp, rot, or timber decay
• Unsafe electrics or outdated wiring
• Non-standard construction concerns
These are issues lenders expect to be resolved before they are comfortable lending the full amount.
Why Can a Retention Lead to a Mortgage Decline?
Not all lenders are willing to lend where a retention is required. Even if the property value stacks up, the presence of essential repairs increases perceived risk.
Key reasons lenders decline retained valuations
Lenders may decline the application because:
• They do not offer retention-based lending at all
• The retained amount is too high relative to the purchase price
• The borrower does not have funds to complete the repairs upfront
• The issues fall outside the lender’s acceptable property criteria
High street lenders are often stricter, while some specialist lenders are more flexible.
Does a Retention Mean the Property Is Unmortgageable?
No. A retention does not automatically mean the property cannot be mortgaged.
It means the lender wants reassurance that certain works will be completed before releasing all funds. Different lenders treat retentions very differently.
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We cover related property condition issues in more detail in our guide on what mortgage lenders look for in valuations.
What Are Your Options After a Mortgage Is Declined Due to Retention?
Being declined does not mean the end of the road. There may still be alternative routes depending on your circumstances.
Option one: negotiate the purchase price
Some buyers renegotiate the price to reflect the cost of repairs. A lower purchase price can reduce risk from the lender’s perspective.
Option two: complete repairs before completion
If the seller agrees, repairs may be carried out before completion so the lender can reassess without a retention.
Option three: increase your deposit
A larger deposit can sometimes offset the lender’s concerns, particularly where the retained amount is relatively small.
Option four: consider a different lender
Some lenders are more comfortable with retained valuations, especially in cases involving older or non-standard properties.
You can learn more about how lender criteria varies in our guide on specialist mortgage lenders.
How Does a Retention Affect First-Time Buyers?
Retentions can be particularly challenging for first-time buyers, as they often do not have spare funds to complete repairs upfront.
In these cases, lender choice becomes especially important. Some buyers also choose to step back and look for a property without condition issues.
We explore this further in our first-time buyer property condition guide.
Will a Retention Affect Your Mortgage Offer Terms?
Even if a lender accepts the retention, it may affect:
• The maximum loan available
• Timescales for completion
• Additional inspections or sign-off requirements
It is important to understand these conditions fully before proceeding.
What Happens to the Retained Funds?
Retained funds are typically released once the required work is completed and confirmed, often through a follow-up inspection or certification.
If the work is not completed within the lender’s timeframe, the funds may never be released.
Key Takeaways If Your Mortgage Was Declined Due to Retention
• A retention reflects property condition, not borrower affordability
• Some lenders will not accept retained valuations at all
• Specialist lenders may offer more flexibility
• Having funds for repairs can significantly improve options
If you want personalised advice, speaking to a regulated mortgage adviser may help clarify next steps.
This guide provides general information only. Personalised mortgage advice should always come from a regulated mortgage adviser.
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Important information: Mortgage Bridge provides information only and acts as a mortgage introducer. We do not provide mortgage advice or make lender recommendations. We can introduce you to an FCA-regulated mortgage adviser who can provide personalised mortgage advice.