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MSE News: Chelsea's top 10-year fixed mortgage that comes with a catch

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MSE News: Chelsea's top 10-year fixed mortgage that comes with a catch

edited 30 November -1 at 1:00AM in Mortgages & Endowments
7 replies 4.2K views
Former_MSE_HelenFormer_MSE_Helen
2.4K posts
edited 30 November -1 at 1:00AM in Mortgages & Endowments
This is the discussion thread for the following MSE News Story:

"Chelsea Building Society has launched a market-leading 10-year fixed rate mortgage but it may not be suitable for all ..."

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  • efuncefunc Forumite
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    This looks really attractive to me. I really don't see the catch:

    "Security comes at the cost of flexibility. If the borrower needs to move home they can take the deal with them and should hopefully be able to top up with a new rate from Chelsea."

    How is that different from any other mortgage? You would just transfer the great 10yr deal to the new property and top up with a second mortgage, if required, from any of the great rates that may be available on the open market at the time, surely? Can someone spell out why this is really something to be avoided?
  • efunc wrote: »
    This looks really attractive to me. I really don't see the catch:

    "Security comes at the cost of flexibility. If the borrower needs to move home they can take the deal with them and should hopefully be able to top up with a new rate from Chelsea."

    How is that different from any other mortgage? You would just transfer the great 10yr deal to the new property and top up with a second mortgage, if required, from any of the great rates that may be available on the open market at the time, surely? Can someone spell out why this is really something to be avoided?
    I think it's a fantastic deal for somebody who is at a stage in life where they know "This is where I'm going to stay for at least 10 years". I would suggest that most first time buyers don't come under this category, but even they can benefit.

    The article rightly draws attention to the ERC and portability clauses, but as you point out this is no different to any other fixed rate mortgage.

    I think the MSE headline is, as happens too often, a tad unhelpful. But potential borrowers do need to think through the possible courses that their life could take before effectively committing to one lender for so long.
  • ScoobyZScoobyZ Forumite
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    The 7 year fixed at 3.69% with £95 fees looks the best deal to me and the redemption figures decrease over time.
  • efuncefunc Forumite
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    I guess I don't really understand why there's a need to stay put for 10 years. Is there a fee you would have to pay in order to transfer the mortgage to your next property? Not a ERC fee, but a transfer fee?

    Otherwise, committing to 3.99% for 10 years doesn't seem to be a particularly heinous thing.
  • newgirlynewgirly Forumite
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    One of the issues that may arise is their current affordability calculators. I am with the chelsea, and owe just over £149K, however when we enquired about moving we were told that although the mortgage deal is portable, their criteria have changed and they would only lend us around £70K.

    Our income levels are the same as they were when they previously agreed to lend us £161K a year and a half ago. So thats quite a big drop in what they are now prepared to lend.

    Other than that its a great deal.:D
    MFW 38

    2020 £14,466.48 / £18,000
  • kingstreetkingstreet Forumite
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    there is no guarantee Chelsea will lend the level of additional borrowing required...
    ... or that Chelsea will want to lend as much as the current mortgage or want to lend anything at all, Mr Hollingworth.

    He does mention that as a problem of portability in general but why not mention borrowers who have had all problems, not just problems borrowing more?
    I am a mortgage broker. You should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice. Please do not send PMs asking for one-to-one-advice, or representation.
  • millermiller Forumite
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    Make sure you clock the rate...
    http://www.youtube.com/watch?v=H8hr-dKwMsY&feature=related

    ...not that I'm saying that will happen anytime soon mind.
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