Fixed rates ending

mcilwain

Hi all, be patient this is my first time using a forum of any type.

My son is with the Chelsea building society and currently has a 3 year fixed rate mortgage of 5.49% over 35 years (32 years remaining) which ends the end of March.

He origionally borrowed £202,000 which over the last three years has reduced to £198,000, the origional price of the house was £225,000 and he laid down a 10% deposit.

He has had one valuation done (others to follow) which valued the property at £250,000.

He has asked The Chelsea B.S. about getting a new mortgage and they have made some negative responses like "the value of the property is less than you owe, so we will not be making you another offer".

My son has told me that the Yorkshire Building Society is taking over the Chelsea B.S.

The Yorkshire B.S. has a lower Standard variable interest rate than the Chelsea.

Because of the Chelsea's attitude my son has looked elsewhere and found that he can get a SVR of 5.79%.

My questions are,

1. Are the Yorkshire taking over the Chelsea?

2. If the Yorkshire take over the Chelsea then what variable rate will be on offer the Yorkshires or the Chelsea?

3. If my son looks for other mortgages elsewhere, will it effect his ability to get a mortgage?

4. Are there any good offer that would suit my son anywhere else.

Thanks for reading.

kmmr

Hi,

Some of your answers are here:

http://www.timesonline.co.uk/tol/money/savings/article6941158.ece

So:
1. YBS is 'merging' with Chelsea, although the Chelsea brand will be retained.

2. In relation to the SVR - it is really up to the new entity to decide what SVR they will go with. At the moment Alliance and Leicester and Santander have different rates, even though they have been merged for over a year now. So, its hard to say what they will do.

3. Looking around is fine - best to contact a whole of market mortgage broker. If you actually apply for a loan, it will show up on your credit records, but thats only a problem if you apply for heaps of them at the same time. Or if you get a few declined.

You may find that to get an actual offer the new lender will need a valuation, which could be costly. Not sure where you got the valuation of £250k, but if its from an Estate Agent, then it will normally be optimistic!

What is the SVR that your son is moving too? How much would the lower rate of 5.79% save him per month? Remember that a new deal will cost quite a lot in application and valuation fees, so you should really do a full cost/benefit analysis.

Good luck, and welcome to the forum.

opinions4u

mcilwain wrote: »

Hi all, be patient this is my first time using a forum of any type.

Welcome to the forum. It's a useful place to be!

He has had one valuation done (others to follow) which valued the property at £250,000.

Who is carrying out these valuations? Local estate agents "market at this price" numbers aren't much use. How much have similar properties locally been selling for? Are properties selling locally? Key questions to consider. Nationwide have a useful tool to help estimate the true value of a property.

He has asked The Chelsea B.S. about getting a new mortgage and they have made some negative responses like "the value of the property is less than you owe, so we will not be making you another offer".

They don't have to offer anything other than their SVR. That said, would they allow your son to pay for a valuation that would allow them to consider offering an alternative mortgage product? If such products are competitive it may be worth it. If the lender's valuer come s up with a low figure, that valuation fee is lost though.

My son has told me that the Yorkshire Building Society is taking over the Chelsea B.S.

Legally it's a merger. But Chelsea is the weak partner within that merger.

The Yorkshire B.S. has a lower Standard variable interest rate than the Chelsea.

Not, at this point, of any use to him.

Because of the Chelsea's attitude my son has looked elsewhere and found that he can get a SVR of 5.79%.

That sounds high for an SVR.

1. Are the Yorkshire taking over the Chelsea?

Merging with, yes.

2. If the Yorkshire take over the Chelsea then what variable rate will be on offer the Yorkshires or the Chelsea?

It's unlikely, in the short term, that there will be any change.

3. If my son looks for other mortgages elsewhere, will it effect his ability to get a mortgage?

It shouldn't do, but he wants to avoid getting a credit search done with every lender on the high street. Perhaps employing a half decent local indeppendent mortgage broker would be an idea.

4. Are there any good offer that would suit my son anywhere else.

Sites like www.moneyfacts.co.uk and www.moneysupermarket.com highlight some of the best deals on the market.

If the loan to value ratio (LTV) is over 85%-90% it is unlikely that he will be able to move his mortgage though.

dimbo61

Your son has only paid off £4k in the last 3 years of owning his home !
Thats the problem with a 35 year term ( some people have 40 year terms)
The 10% deposit means that he may well be in negative equity ( bought in march 2007 )
He can only hope that the SVR is lower than his current fix and overpay over the next 12/18 months to build up the equity in his home!