Retention (mortgage)

A mortgage retention occurs when a lender's surveyor identifies specific repairs or remediation that must be carried out on a property before the full mortgage advance is released. The lender agrees to lend the full amount but withholds a portion (the retention) until the required works are completed.

Typical reasons for a retention include: a roof that needs immediate repair, a boiler that needs replacing, damp works required, or structural repairs recommended. The surveyor's report will specify the works required and the estimated cost, and the lender will retain that amount (or a similar sum) from the advance.

For property investors, a retention creates a practical problem: you complete the purchase with a smaller mortgage advance (and therefore need more cash), and you must carry out the specified works within a set period (typically 6-12 months) before the retained funds are released.

In practice, a retention is often an opportunity to negotiate a price reduction from the vendor. If the lender identifies a problem and retains £5,000, you can reasonably request a corresponding reduction in the purchase price, effectively passing the cost of the remediation to the vendor.

Some BTL lenders are more retention-prone than others. Specialist BTL lenders with surveyors experienced in residential investment properties tend to impose fewer retentions than residential lenders applying residential standards.