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Chelsea offers fixed-rate focus

CHELSEA BUILDING SOCIETY

5 Year Buy-to-Let Fixed Rate

Type:
Fixed-rate buy-to-let mortgage

Fixed term:
Until May 1, 2009

Fixed rate:
5.79%

Minimum loan:
£35,000

Maximum loan:
Up to 80% of valuation subject to a maximum of £300,000,
up to 75% of valuation subject to a maximum of £400,000,
up to 70% of valuation subject to a maximum of £500,000

Income multiples:
Rental income must be at least 130% of monthly mortgage repayments

Arrangement fee:
£295

Redemption fee:
5% of amount repaid until May 1, 2009

Introducer&#39s fee .
0.35% of original loan

Tel: 08702 404808

Chelsea Building Society&#39s five-year fixed-rate buy-to let mortgage is available for loans up to 80 per cent of valuation available up to a maximum loan of £300,000. The maximum loan is £500,000 which is available for loans up to 70 per cent of valuation.

Park Row Independent Mortgages managing director Kevin Paterson
does not like five year fixed rates. He says: ” I think it is too long in our market to fix for. The Chelsea mortgage is not exactly a market leading product &#45 more of an also ran.”

Paterson thinks the rental income assessment at 130 per of the mortgage repayments is as good as any other deal and that the interest-only option adds flexibility. However, he complains: “The introducer&#39s fee is nothing special at 0.3 per cent, with no reflection of the rate loading.”

Paterson is not a fan of the redemption penalty on this mortgage. He says: “It is not a sliding scale, its level is at 5 per cent throughout the fixed term which is a little punitive. I also feel the fees are a bit on the high side for no apparent edge on rate. However, the fee-free option makes this an attractive remortgage proposition for landlords looking to fix for five years at minimal cost.”

Scanning the mortgage market for potential competitors to the Chelsea mortgage Paterson goes for the market leading Mortgage Xpress five &#45year fixed rate which. This mortgage is available up to 85 per cent of valuation, which Paterson regards as an advantage compared to the Chelsea&#39s limit of 80 per cent.

He adds: “Even Cheltenham & Gloucester have a competitive five-year fixed rate at 5.59 per cent and both Mortgage Xpress and Cheltenham & Gloucester have significantly lower fees than the Chelsea.”

Summing up Paterson says: “This is a competitive market and Chelsea has not got a big enough edge to make this product very popular. It is a cautiously priced middle of the road buy-to -let product.”

Suitability to market Average
Competitiveness of mortgage rate Average
Adviser remuneration Average
Overall 6/10

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