Stage Payments on existing house

[music]

Hi there
I have been reading this section for some time now and found it very interesting. I wonder if I can ask your advice.

My partner and I are applying to my bank for a mortgage. In the course of the application they asked what sort of house we had in mind. We said we didn't know exactly as we hadn't found it yet, but that most of the houses in the areas we are looking in would require work done to them. That lead to a long discussion with the bank about 'stage payments'. I was not clear on what they meant. It is our intention all along to hopefully look for the maximum (prudent) mortgage from the bank for the house, and use our savings for the renovation/extension.

However the bank said that if repairs/ renovations are required right from the off before we move in, that we would have to finance them from our savings and the bank would make good on this later on after engineers cert and architect sign-off. At least that's what it sounded like. I am now quite confused and not a little surprised. We're not planning on a new build, just renovating an older house, probably an Executor Sale Semi-D type of place.
It would seem that we are being penalised by having some savings which we had intended to use for renovation and probably extending too.

Am I missing something here? Do all the banks demand this?
Many thanks

 

[Ann1]

Hi Music and welcome to AAM
This used to be called retention of funds and usually happened if the banks surveyor did not regard the property has habitable. In other words if you want to purchase a house that needs major renovation work like roof repairs, rewiring, total upgrading of the central heating unit, damp proofing, moving load bearing walls etc. then the bank will retain part of the agreed mortgage until the works are complete and certified by a professional. Their own surveyor will usually check the works also and stage payments will be made to you as each part of the works are completed and certified. On the other hand if you find a home that is just a bit run down and really only needs painting and decorating and an updated kitchen it is unlikely the retention of funds will come into play.

 

[music]

Thank you Ann. That is very helpful.
Do all banks offering mortgages in Ireland have this policy?