Net borrowing is just around the corner

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The Independent Online
So you want to know the difference between a repayment mortgage and an interest-only deal? Or maybe you want to check out the latest fixed- rate mortgages over five years? It is all available on the Internet.

Pretty soon you will be able to apply for a loan through your PC too, although, until now, financial institutions in the UK have been slow to take advantage of the Net's potential, largely because of fears that security could be compromised.

Now that security and encryption technology is more reliable home loans are likely to be at the forefront of finance on the Net, if only because the money transfers are still done by the banks and lawyers and only information travels over the wires.

Already there has been a massive sea-change in the way that people regard mortgages. For many it is no longer a process of going cap-in-hand to the bank or building society manager to apply for a mortgage but more a case of picking up the telephone to find the best deal. To apply for a mortgage you call the lender, provide personal and property details and in many cases get a provisional offer while on the line.

The call will take from 10 to 20 minutes depending on how much work is done by telephone and how much left for your later form-filling, but the call is often free or charged at local rates.

Direct selling of mortgages was originally a niche market business, involving a handful of specialist operators. Today, most of the major lenders either offer their standard product range by telephone or have a separate operation with its own distinctive, if limited, product range.

For those who are comfortable with the idea of arranging a home loan by telephone it is a small step to do it on-line. Think about it: a lender needs certain data but how it is gathered is irrelevant, particularly when most lending decisions are made by computer anyway.

So rather than having someone else across a desk in a branch or at the other end of the telephone key the information into a computer, why cannot you do it yourself? Assuming that you are using a secure system, there is no reason why you cannot apply for a mortgage electronically. It is quick, simple and easy-to-use. Or it would be if it was available now.

There is already a lot of mortgage information on the Net, as most lenders post their latest rates and other details on Web pages. But the next big step will come later this year.

Infotrade, the fast-growing on-line personal finance and investment service, has joined forces with Mortgage Link, a supplier of product information to brokers and financial advisers. Infotrade already offers customers Mortgage Link information on around 900 mortgage schemes from some 90 lenders. It breaks the information down in different sections, such as fixed rates, discounts, first-time buyers, and subscribers can download these at pounds 2.75 a time. (You also need a subscription to Infotrade itself, which costs pounds 2.95 a month, including access to a whole range of personal financial information, including on-line share prices.)

Allow five minutes or so on-line, a couple of minutes to print, and you can be comparing all the latest deals on rates, terms, fixes, percentage loan-to-value and the rest. But the next step is to make the leap from information to action.

"We've signed agreements with Mortgage Link to have application forms on-line," says John Mace, business development manager at Infotrade. "We're looking at a number of different lenders, 10 to 12 initially, who will take application forms electronically. Customers will simply have to complete a generic application form on-line which will be e-mailed to a secure central source and then on to the lender."

Once lenders catch on to the simplicity and attraction of such a system, you can bet that most of them will not be far behind in either joining Infotrade's operation or setting up a rival service of their own. The economics, if nothing else, will be compelling.

Consider that two years ago there were no UK mortgage lenders with a presence on the Net. Bradford & Bingley won the race to be the first and was soon followed by a swath of other building societies and banks. A useful tool on some sites is a mortgage payment calculator, which is helpful if you are having trouble working out just how much you can afford.

Check out Legal & General and Alliance & Leicester for this, although you may have to wait a week or two for the A&L, which has suspended its site during its flotation.

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