Mortgage Guides

Chelsea will lend to anyone who is at least 18 years old (on most mortgages). Ordinarily, you will need to have been resident in the UK for the past 3 years, have an indefinite right to reside and work in the UK (evidence may be required), be employed by a UK based business, be paid in £ sterling, pay UK tax and be purchasing a property in the UK.

Up to 4 people can be joined in an application. However, only 33% of verified income will be assessed as admissible for applicants 3 and 4.

You will need to be able to prove your income and your application will be subject to a credit check.

The usual term is 25 years but your loan can be from 5 to 35 years (subject to your planned retirement age). Unless you plan to retire earlier we will treat the normal retirement age as your 65th birthday and the maximum term will be assessed based on the eldest applicant's age at the end of the requested term. No lending into retirement (planned or normal retirement age) will be accepted unless an applicant has no income or their income is being disregarded.

You can choose between repayment, interest only or a combination of both.

With a repayment mortgage you pay interest plus capital each month until, by the end of the term, your mortgage is repaid.

Alternatively you can make interest only payments. The monthly payments are lower than a repayment mortgage however, the amount you borrow remains outstanding and will have to be repaid at the end of the mortgage term. This may be done, for example, by linking your interest only mortgage to an endowment assurance or personal pension plan (evidence may be required). You can also repay the amount borrowed from your own personal resources. It is your responsibility to do this and you should also arrange life assurance to repay the loan in the event of your death.

Where any element of the loan is requested on an interest only basis then the LTV cannot exceed 75%.

Provided they are not located in the Channel Islands or Isle of Man which are unacceptable, we will lend on most UK properties built using standard construction methods and materials including modern timber framed properties. Mortgages will only be considered on sole residential homes.

Chelsea will NOT lend on the following:

• Properties above or below commercial premises
• Where no internal bathroom and w.c. or kitchen present (unless to be installed prior to completion)
• Studio flats
• Bedsits
• 2nd homes, homes for dependant relatives and properties for rental purposes
• Flats/maisonettes/apartments where the LTV exceeds 75%
• Freehold flats and maisonettes
• Flats with balcony access (i.e. access via a covered walkway)
• Agricultural properties with restrictive covenants
• Isolated rural properties with restricted access and services
• Where liable to be subject to a clearance or compulsory purchase order
• Pre-cast reinforced concrete properties designated as defective under the Housing Act 1985 (unless satisfactorily repaired in accordance with our minimum requirements)

Freehold and leasehold houses are acceptable. Flats and maisonettes must be leasehold. The lease must have at least 60 years to run (or 35 years plus mortgage term if longer) at the date your mortgage is completed.

A valuation of your property will be required for mortgage purposes. This is so that we can be certain that the value of the property is sufficient for the amount you want to borrow and should not be relied upon by you when deciding whether to proceed. The valuation fee, which will vary depending on the value of the property, will include a non refundable administration fee of £125 for dealing with your mortgage application. This fee is payable with your mortgage application.

The minimum loan is dependant upon the mortgage product selected. You may borrow to purchase a new property or to replace an existing mortgage from another lender. When replacing an existing mortgage you may be able to borrow more than your current loan to finance home improvement or to repay other lending. The maximum loan may vary depending on the mortgage product chosen. Please see your Chelsea contact.

For remortgage applications, the applicants must have owned and lived in the property to be remortgaged for a minimum of 6 months from the date of application.

The amount you can borrow will also depend upon your gross household income and the corresponding income multiple that can be applied, as shown below:

Please contact your local branch or call 0845 607 6612 for more details.

A higher lending charge is only charged where a Chelsea mortgage is taken out in excess of 90% of the price or value of the property (whichever is lower). The higher lending charge protects Chelsea by reducing the risk on higher percentage loan to value cases. It does not, however, remove or reduce your responsibility for payment of the full mortgage balance.

This will depend upon the particular mortgage chosen. Each Chelsea mortgage shown on this website will give full details of early repayment terms.

If you are switching your mortgage from your existing lender to Chelsea (but are not buying another property), and the mortgage you have chosen does not help towards the legal fees, we can help with our remortgage service. Check the specific product you are interested in to find out if it offers assistance towards legal work.

Our remortgage service is designed to help you transfer your mortgage from your existing lender. The legal process has been streamlined, so transferring your mortgage to us is completed quickly. The service can only be used if your property is in England, Wales or Scotland.

The service is provided by either our in-house Legal Remortgage team or through our appointed solicitors.

We charge £250 for the standard work necessary to transfer your mortgage for a property in England and Wales. If the property is in Scotland, the fee will be £293.75.

If the transfer of your mortgage involves further work, then additional fees may apply. You should ask your Chelsea contact for further details of this service.

If you decide you would like to use the service then all you need to do is indicate you wish to use 'Chelsea Solicitors' on your application form.

All mortgage pages must be read in conjunction with the Chelsea's booklet Getting the home you want.

Advance

The actual amount of money we lend you.

Additional advance

Any further or additional borrowing secured against your property, which we lend you in addition to your initial mortgage advance. Sometimes known as a further advance or additional loan.

APR (Annual Percentage Rate)

The APR shows the total yearly cost of a loan taking into account all costs (e.g. interest rates, fees, etc) with the mortgage. It is the overall cost for comparison purposes and should allow you to compare mortgages from different "institutions" or "providers" on a like for like basis.

Administration fee

This is a fee we charge to process your mortgage application. It is usually non-refundable, even if your application is rejected because it does not satisfy our lending criteria.

Arrangement fee

This is a fee we charge for certain types of mortgage products (eg fixed rate products and other special rate mortgages).

Arrears

The term used to describe overdue payments where a borrower has failed to keep up the monthly mortgage payments.

Base Rate

The rate of interest shown as the Standard Variable Rate in the offer of advance (we reserve the right to vary the Standard Variable Rate within the Mortgage Conditions).

Bank of England Base Rate

This is the interest rate set by the Bank of England (it is officially called the 'repo rate').

Buy to Let mortgage

A mortgage that lets you buy a property to rent out.

Capital

The amount of loan on which interest is calculated.

Capital repayment

Any payment made to your mortgage account that exceeds the normal monthly mortgage payment that we require from you. Also see 'Early Repayment Charge'.

Capped rate

A rate where interest is charged at our Standard Variable Rate, but it is guaranteed not to rise above a certain rate (the capped rate) for a specified period of time.

Cashback mortgage

This is a mortgage, where you receive a cash lump sum from us when you take out your mortgage (the cash amount is calculated as a specified percentage of the sum that you borrow from us).

Completion

The stage at which legal ownership of your property is transferred to you and/or we release your mortgage advance to you or your conveyancer.

Conveyancing

The legal work involved in buying or selling a property.

Daily interest

Interest is calculated on the balance outstanding each day. When you make a payment, interest is calculated on the new balance straight away.

Disbursements

These are expenses that your conveyancer pays on your behalf.

Discharge fee

This is the fee we charge to attend to the formalities involved in closing your mortgage account following repayment of the advance.

Discounted rate mortgage

A mortgage where you pay a set amount below our Standard Variable Rate for the period of the discount. However, our standard rate can go up or down. See 'SVR'.

Early repayment charge

The fee that we will charge you if you make an early repayment of capital or transfer to another product or repay your mortgage entirely, within the Early Repayment Charge Period detailed in the product leaflet and your Offer of Advance. See 'Capital Repayment'.

Endowment plan

This type of investment combines monthly payments into a life assurance policy and an investment plan that is designed to repay the mortgage at the end of the mortgage term, or in the event of the borrower's death.

Equity

The difference between the value of the property and the loans secured against it. Where the value of the property is less than the value of the loans secured against it, this is known as negative equity.

Exchange of Contracts

The point where the buyer and seller are legally bound to proceed with the sale and purchase.

Fixed rate mortgage

A mortgage where the interest rate remains the same for a specified period.

Flexiplan mortgage

A mortgage that allows you to make either regular or lump sum overpayments (capital repayments) as and when you like, without an early repayment charge. This can help reduce the term and total amount of interest you have to pay.

Freehold

This is where you have outright ownership of the property you purchase and the land it stands on.

Gazumping

This is where you agree a price with the person selling a house, only to find out later that someone has put in a higher offer which has been accepted instead.

Ground rent

Annual charge payable by leaseholders to the freeholder.

Higher lending charge

This is a fee sometimes payable by the borrower to the lender, to cover the higher risk on lending a higher proportion of the value of a property. This fee provides some protection to a lender against the risk of the borrower defaulting under the mortgage, and the lender being unable to sell the property for enough to cover the amount owed.

This fee does not, however, remove or reduce your responsibility as a borrower for repayment of the full mortgage balance.

Homebuyers survey and valuation report

This is a more detailed inspection than a valuation, yet a valuation will still be included. The inspection will look at all reasonably accessible parts of the property internally and externally (from ground level or publicly accessible areas) and the report will comment generally on the state of repair and condition. The roof void will be entered (where practicable) to enable the surveyor to comment on the condition of the roof structure.

An overall impression of the services will be given (but they will not be tested). Outbuildings such as garages will be commented upon but only in respect of serious defects. The site, boundaries, paths etc will be reported upon in relation to special risks, such as large nearby trees. This report is suitable for most properties, but not those which are very large, old or of unusual construction. A Structural Survey (sometimes called a Building Survey) may be more appropriate for these types of properties.

Initial disclosure document

A document that provides details about our mortgage services. This includes confirmation of whose mortgages we can provide, the fact that you will not receive advice or a recommendation from us, details of who regulates us and how you can make a complaint.

Interest only mortgage

Your monthly payments to your lender are made up of interest on the original loan only. You repay the amount you borrowed (the capital) at the end of the mortgage term using the proceeds of a separate investment plan, for example an endowment policy, personal pension or ISA, or from your personal resources.

Introducer/intermediary

This is somebody, other than a lender, who advises you about the choice of your mortgage.

Key facts illustration

A document that we must give to you before you apply for a mortgage which contains all the important information you need to help you decide if a particular mortgage is right for you. In it we will include the details of the mortgage we have discussed with you, including the costs.

Land registry fee

A fee payable to the Land Registry for registering the transfer of ownership of a property/or grant of mortgage.

Leasehold

This is where ownership of the property is under the terms of a lease ie. not outright as with freehold. This is common with flats.

LTV

Loan to value. This is the size of the mortgage as a percentage of the value of the property or the price you are paying for the property whichever is the lower (a £180,000 mortgage on a house valued at £200,000 would have an LTV of 90%).

Mortgage deed

The legal document by which the owner (and borrower) of the property grants a charge over their property in favour of the lender to secure the loan.

Mortgage offer

If we are happy to accept your application for a mortgage, this is the document that we will send you. It sets out the terms and conditions on which we are prepared to make the loan or further advance to you.

Mortgage term

The length of time over which the mortgage loan is repaid.

Mortgage valuation

A simple check of the property that is carried out for the lender to find out how much it is worth and whether it is suitable to lend a mortgage on. This is for the lender's benefit only and may not reveal defects in the property, which could affect your decision to proceed. You should consider organising your own Homebuyers Survey or full structural survey (see 'Homebuyers Survey and Valuation Report and Structural Survey'(Building Survey).

Mutual

A term for an organisation that is owned by its members, such as building societies, friendly societies and some life assurance companies. Mutuals don't have shareholders like public limited companies, so any profits are used for the benefit of its members only.

Payment date

The date which we notify to you as being the day in each month on which you must make your mortgage payments.

Personalised illustration

A document that contains a quotation for a particular mortgage and full details of the mortgage, such as whether any early repayment charges apply. This document is in a standard industry format and contains important information that you should read and understand to help you choose a mortgage that is right for you.

Portable

A portable mortgage allows you to transfer the terms and conditions of that mortgage product between properties when you move house.

Prospect mortgage

A mortgage product we have available which may be suitable if you have experienced financial difficulties.

Purchaser

An older term for the buyer of a property.

Redemption

The point at which the outstanding balance of a mortgage is repaid, including all interest, costs, and other charges (such as any early repayment charges) which are due on it.

Remortgage

Transferring your mortgage from one lender to another without moving house.

Repayment mortgage

A loan where the monthly payments are made up partly of capital and partly of interest, so that the loan is repaid in full at the end of the mortgage term.

Self certification mortgage

Designed especially for the self employed.

Solicitors fees

These are charges you pay for the conveyancing and work that your solicitor does for us.

Stamp duty

This is a Government tax you will have to pay on the price of the property if it exceeds £125,000. The percentage of the tax paid varies according to the price of the property paid.

Structural Survey / Building Survey

This is an in depth report particularly suited to large, old or unusual properties and can be tailored to the needs of the client and type of property. The surveyor will advise on fundamental defects and any legal implications that they may have.

Every aspect of the property is looked at as for the Homebuyer Survey and Valuation report but in greater depth and any additional investigations such as drains tests, will be recommended.

SVR

Standard Variable Rate. This is our standard rate of interest, which is variable and can go either up or down.

Valuation

See 'Mortgage valuation'.

Vendor

An older term for the seller of a property.