The Unbelievable Chelsea BS

Robert_Sterling_3

Ryan23 wrote: »

Is this the case? I also seemingly pay interest on an annual basis and not daily. They offered to "quote me a figure" to change my account from an annual basis to a daily basis. However, would this make any difference to my monthly payment? Is it better or worse to be on daily or annual interest? Finally, If I could leave the Chelsea today I would! The tone of their letter was: take it or leave it! Advice please!

You can be on an annual or a daily basis.
It is a bit like you can measure your height in feet and inches or in centimetres. It does not make you any more or less tall. However the small print associated with each of the types, daily or annual, may differ.

One for example could say that "The monthly payment will only be changed once a year even though the actual rate of interest charged may change for example 5 times in a year. etc etc

dannykos

IMO, the risk differential between a fixed or variable rate applies in the same (but smaller) way to discounted svr vs base rate trackers. You are still hedging your bets either way - although it does seem that svr's never come down by as much, but ALWAYS go up by as much, if not more than the base rate!

ILW

SVRs have no direct link to BoE base rate, they are based on many other factors. If you were told the SVR was linked to base you may have a mis selling claim.

Gorgeous_George

samsuka wrote: »

OK discount mortgage. Potatoe potato. Our recent mortgage is the Chelsea SVR -1.19%. As far as i am concerned its an SVR tracker. Google the term.

Thanks for your compassion. I took a (correct) gamble on the base rate, not the mortgage lender that i was getting it from. Virtually every other lender has cut their SVR rates in-line with the BOE rate, how on earth was i to know that Chelsea would refuse to cut their mortgage in-line with it.

But herein lies the problem. Your deal tracks SVR - the 'V' stands for variable. You may as well be tracking bananas.

Your gamble was on Chelsea's SVR and not on the base rate (base rate trackers track the base rate - there's a clue in the name).

GG

Dan_1976

Or are they smart! Lots of lenders are trying to stop people sitting on SVR, what better way to do it. Why have short term lending on a decreasing rate?

Or they are making money and putting it away why credit is short?

Its 2009, as ever lenders are out for themselves!

MarkyMarkD

Starting another thread with an exact duplicate of your post elsewhere isn't going to get you a different answer!

SVRs are variable and can be set by the lender however they choose. There is no implied linkage to BBR or they would be called trackers. The only exception is the couple of lenders - not including Chelsea - who have caps on the differential between BBR and SVR, which means that they have effectively become trackers as rates have fallen.

Ian_Griffiths_Halifax

Ryan23 wrote: »

I received a reply from the Chelsea BS today re a letter - from myself -complaining about their high SVR of 5.79%. Rather cooly/snootily their reply included the unbelievable remark: "I am unaware of what rates other companies are currently offering"....if you believe that folks then I could sell you 20,000 shares in RBS!!! :rotfl: At present I am on fixed payment for the year. According to the Chelsea the SVR rate does vary throughout the year and it is possible to "Pay more off your mortgage when the rates decrease and your payments stay the same". Is this the case? I also seemingly pay interest on an annual basis and not daily. They offered to "quote me a figure" to change my account from an annual basis to a daily basis. However, would this make any difference to my monthly payment? Is it better or worse to be on daily or annual interest? Finally, If I could leave the Chelsea today I would! The tone of their letter was: take it or leave it! Advice please!

The benefit of changing from Annual to Daily Interest would only have any effect if you have a Repayment Mortgage or you do intend to Overpay (check out any penalties if you do so). The effect would be that your payment today would mean that you owe less to be charged interest on tomorrow. If you have an Annually charged mortgage, then your Interest is based on the balance at the start of the charging period (either the start of the year or the anniversary of your mortgage depending on the lender) and then the interest for the following year is calculated 12 months later and only at that point is the overpayment or Capital elements of a Repayment Mortgage, taken off the balance for Interest Calculation purposes.

If you have an Interest Only mortgage and aren't overpaying, it wouldn't matter if you are on a Yearly, Daily, 10 yearly or minute by minute basis, it won't make a difference.

As for you taking a Discounted Rate mortgage rather than a Tracker or a Fixed Rate, you only have your self to blame. Any broker would have recommended these before recommending a SVR Discounted Rate (or needs sacking) so I can only assume you went direct. If that's the case, you bought the product, you weren't sold it.

aungiers

Prior to me taking out my current deal with the CBS (my fixed rate had ended), I pressed their employee over the phone about the possibility of svr reductions should further base rate cuts happen. This occurred in Oct '08 following the first 0.5% base rate cut.

I was told:

'It is inevitable that the svr would follow base rate cuts to enable CBS to remain competitive in the mortgage market'

I took out my current svr discount mortgage with CBS following that positive comment. (Svr -0.75% = 5.04%) 2 year deal.

I now feel somewhat aggrieved that CBS are continually choosing not to pass on cuts, to the extent that I feel I was sold the product on the misconception. They had very little alternative products at the time, their trackers disappeared as soon as any rumours surfaced about a base rate cut !!!

I had no reason to stay with Chelsea at the time, good equity in my property, good credit rating. I could have moved lenders with relative ease.

Is there anything I can do but feel sorry for myself ?

Any views ?

Any advice would be much appreciated.

Rednoseranter

I think you've nailed it - CBS don't want to be competitive, not many lenders do.

Any 'misconception' was yours - the person you spoke to would never have been in a position to take a guess at what decisions would be made in the future about the movement of the SVR rate.

Unless you received advice and a reference has been made in the suitability letter regards the inevitability of the SVR being altered in the event of a base rate cut, there is very little you can do. Maybe make a complaint and hope that they recorded your telephone conversation with CBS?

riles

The problem with many forums is that the anger and ranting can sometimes get in the way of a relevant argument.

I'm with A&L and so I'm only one step away from the OP in terms of big organisations and relatively high SVRs. However, I'm on my fix until June, and when I come off that, the current SVR will mean my payment will be the same as I'm currently on. So I haven't lost out, I just haven't benefited from the rate cuts.

And as we are now definately in negative equity territory, and our savings (A) wouldn't solve that and (B) are a rainy day buffer, we are stuck with A&L for the foreseeable, so we are at their mercy.

Now, I understood when I took out the mortgage that a revert to SVR is not a base rate tracker, so I'm not angry (other than with myself as I only chose A&L over HSBC to save fees on application). But here's a question. If A&L decide to up their SVR to 100% (lets be ridiculous for a second), what can I do about it? Nada. I can't move, and would surely default. But if they took it up to 20% I could probably afford that payment, but it is still taking the p1ss somewhat. And as I am well aware, no-one else would offer me the 110% mortgage I would need at the moment to get away from that.

Now, I assume that there is some form of consumer protection to stop them doing that. I've never considered it in the past and don't know where it would be written. But at what level does that protection come in, and could it therefore help our OPs cause?