Chelsea offers a five year fix at 1.94%

Chelsea offers a five year fix at 1.94%

Chelsea Building Society has cut its five year fixed mortgage to 1.94 per cent to those with a 35 per cent deposit. 

The offer which comes with a £1,695 product fee has sparked comment that such low rates could encourage those with higher rate fixed term mortgages to pay redemption charges and switch to a lower rate.

Chelsea Building Society is also offering a 2.05 per cent five-year fixed rate mortgage at 75 per cent loan-to-value (LTV), with a £1,695 product fee.

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Both mortgages come with £250 cashback on completion and free standard valuation for house purchases, or free standard valuation and legal fees for remortgaging customers.

Chelsea has also reduced rates across selected two and three-year fixes with a three-year option at 1.74 percent, at 75 per cent LTV with a £995 product fee, which is available to both those buying a home or remortgaging.

Daniel Clayden, director at Clayden Associates, said that such rates were low enough for people to consider paying early redemption charges on fixed term mortgages at older payment rates of 4-5 percent.

"If you have secured yourself a rate that is a couple of a percent lower you could save yourself five lots of 2 percent which would more than cover a 5 percent early redemption charge," he said.

Richard Barker, product manager for Chelsea Building Society, said: “We are sure the new rates will prove attractive to borrowers, and we’re keen to offer value for money to our customers with incentives like cashback on completion.”