Spotlight CAPITAL BANK FAST-TRACK MORTGAGE

The product: Capital Bank Mortgages Fast-Track Mortgage Direct.

The deal: Capital Bank is a subsidiary of Bank of Scotland. It is launching a telephone-based "flexible mortgage" aimed at people with "changing lifestyles". This means it allows borrowers to take payment holidays, make overpayments and underpayments and draw cash from the loan itself if they have made overpayments.

Loans: Up to 95 per cent of a home's value, with a discount of 0.35 per cent throughout the entire life of the mortgage from the existing standard variable rate, currently 8.69 per cent.

Plus points: Flexibility has become one of the most over-used words in the mortgage lexicon, with increasing numbers of companies claiming theirs is the one to meet borrowers' needs.

This one does have some positive points. It can be switched to a new home, there is no compulsory insurance or transaction fees, valuation fees are refunded and there are no early-redemption fees. Lump sums or regular overpayments can be made or up to six months of payment "holidays" taken.

Most significantly, the mortgage operates on a "daily rest" system, whereby interest payments are calculated on the day they are made, reducing the outstanding loan immediately rather than once a year. This system can cut many thousands of pounds in interest payments from the typical cost of a loan over 25 years.

Self-employed borrowers seeking up to 80 per cent of a property's value are eligible for this loan, with an income multiple of 3.5 times one income or 2.75 times joint income on loans up to 85 per cent of a home's value.

Drawbacks and risks: By removing the discipline whereby mortgage payments must be made every month without fail, mortgages of this sort can lull borrowers into a false sense of security - only to hit them hard should things go wrong.

The discounted rate is attractive, but then there are three cheaper options at present: Clydesdale Bank, which charges a variable rate currently standing at 8.2 per cent, and Legal & General's Flexible Reserve Mortgage, which is similar in its approach but currently charges 7.95 per cent. This second operates "monthly rests" for its loans. Finally, Tipton & Coseley Building Society charges just 7.69 per cent, albeit on a loan-to-value of 75 per cent only.

Verdict: A good idea reasonably executed, with a number of plus points, particularly for the self-employed. But not the very best.

Marks out of five: Three and a half.