coventry building society mortgage

lindsay_clayton

I am looking to buy my first property with my partner and together we can afford about £210,000 mortgage and £37,500 deposit giving us an 85% mortgage on a house at 247,500!

I have looked at a range of banks and Building societies and they all have similar rates or around 1.5-1.9% fixed initial rates for 2 years with 3.75% standard variable rate after that. Now i have found a mortgage on Coventry using this site that offers 1.59% variable rate for term on their Flex for Term mortgage.

I don;t understand how this interest rate for this mortgage is so low, their standard variable rate is currently 4.49%?? I understand that there is always a risk for variable rates as they could go up and down but when on the phone to them an advisor said their variable rate for this mortgage is likely to go up or down at a similar rate to their standard variable rate. This seems too good to be true as a fixed 2 year mortgage goes up from 1.7 say to 3.75 after the fixed term then how can this variable mortgage stay at a around about 1.6 and nit be an average of an initial fixed rate and standard variable??

I hope i have made sense, but any advise would be good if this is a too good to be true offer. I don't know if i can find out the history of this type of mortgage of theirs or if it is a new product they are trialling?

thanks

Thrugelmir

In essence the lender can revise this variable rate whenever they wish. There's no correlation to BOE base rate. What determines the rate is the amount that it costs the lender to source the funding.

silvercar

Historically they have followed the base rate. They have had this mortgage offer for years. Search for Coventry on this mortgage board and you will see a few other threads about it.