Finance by Phone: How to raise a mortgage without leaving home

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The Independent Online
Buying a home can be time-consuming but there is no reason why getting a mortgage should be. For those with neither the inclination or time to walk up and down the high street in search of the best deals, simply pick up the telephone.

More than 15 lenders now run telephone mortgage services. Each organisation prides itself on the convenience, speed and simplicity of its operation. Many also offer cheaper deals by telephone than through their network of branches.

To find out if the lender would be prepared to give you a mortgage simply call and answer some questions about yourself, such as where you live, your age and your income. In many cases the lender will be able to make you a provisional offer within minutes. If you know how much you want to borrow the lender will be able to work out the payments at the same time.

Some lenders will fill in a mortgage application form on their computer as you speak. This typically takes around 25 minutes but the phone call is often free. A copy of the application will be sent to you to check, sign and return. Other lenders will send an application form for you to complete. Bank of Scotland Mortgages Direct says it does this so people can sit down and take their time, ensuring the information is exact.

Telephone mortgages can be cheaper. For example, Bradford & Bingley Building Society charges a standard variable rate (SVR) on its mortgages of 6.74 per cent. But its telephone mortgage arm, Bradford & Bingley Mortgages Direct, has an SVR of 5.99 per cent.

Going direct also gives borrowers access to lenders who may not have a branch near them, or indeed, may not have a branch network. For example, Direct Line only offers its services over the phone and has an SVR on its mortgages of 6.05 per cent.

While some lenders believe mortgages sold over the phone should be kept simple, others offer a range of products.

Direct Line has taken the no-frills approach, offering just one mortgage product with no fees attached. The mortgage is available to both first- time buyers and existing borrowers, for up to 90 per cent of a property's value. The mortgage is available on a repayment or interest-only basis. Like several other direct lenders, Direct Line does not charge a mortgage indemnity guarantee (MIG) fee, which can add hundreds of pounds to the cost. The MIG fee is to pay for insurance for the lender against the risk of a borrower defaulting on their mortgage payments.

Britannia offers some of the range of mortgages that are available through its branch network through its telephone arm as well, although to keep the process simple it limits these to repayment or interest- only mortgages. The building society believes it can reach many people who do not live near one of its branches in this way.

Other lenders offer a range of mortgages that are only available over the phone.

This year Legal & General launched its direct mortgage operation. Like Bank of Scotland Mortgages Direct it is offering flexible mortgages that allow people to have payment holidays and to vary monthly payments.

So, if you feel confident about dealing with a lender over the phone, ring around to see what deals are on offer.

q Legal & General, 0800 664444; Bank of Scotland, 0800 810810; Britannia, 0800 526350; Direct Line, 0181-649 9099; Bradford and Bingley, 0800 258258.