A retention is where a mortgage lender holds back some of your mortgage funds until your new home is complete.
A retention does not normally apply to cost based stage payment mortgages, but self build lenders offering valuation based stage payment mortgages will require a retention. It’s likely that they will hold back between 5-10% of your total loan amount until your build is complete. So on the average self build loan amount of £250,000, there will likley be a retention between £12,500 and £25,000.
This can be problematic as you reach the latter stages of your build and have subcontractors on-site like electricians, joiners and plumbers who generally work on a labour only basis. This needs some careful planning to ensure that you can pay for your materials and labour in your final fit out stage prior to the final stage release being made by your lender.
A retention is where a mortgage lender holds back some of your mortgage funds until your new home is complete.
A retention does not normally apply to cost based stage payment mortgages, but self build lenders offering valuation based stage payment mortgages will require a retention. It’s likely that they will hold back between 5-10% of your total loan amount until your build is complete. So on the average self build loan amount of £250,000, there will likley be a retention between £12,500 and £25,000.
This can be problematic as you reach the latter stages of your build and have subcontractors on-site like electricians, joiners and plumbers who generally work on a labour only basis. This needs some careful planning to ensure that you can pay for your materials and labour in your final fit out stage prior to the final stage release being made by your lender.