Brum Brum: a car with your mortgage

West Bromwich Building Society will raise the stakes in the competitive UK mortgage market today when it becomes the first lender to offer its customers a free car with every home loan.

The new "Brum Brum" mortgage will come with a free Rover 25 for anyone who borrows between £90,000 and £500,000. The loan will be charged at West Bromwich's standard variable rate of 5.99 per cent. However, customers will be subject to hefty redemption penalties if they decide to switch or pay off the mortgage within the first five years.

Stephen Karle, the group services director for West Bromwich, said: "For first-time buyers it means they can now own both a new home and a new car - something many could only dream about. It's also a great boost for MG Rover Group, supporting local industry and jobs."

Paul Stroud, the UK commercial director for MG Rover, said the West Bromwich offer was "a class-leading product initiative and an industry first".

But Ray Boulger, the senior technical manager for Charcol, the independent financial adviser, warned that the mortgage did not necessarily represent as good value as it might seem. "It's a good marketing gimmick, but it will be a poor value mortgage for nearly everybody," he said.

Rover 25s retail at around £8,000 but most car deals include road tax, as well as finance or free insurance for a limited period. The West Bromwich offer includes only the car.

Mr Boulger said the deal might be good value for people taking out the minimum mortgage of £90,000, because the car would represent about 9 per cent of the loan value. However, he said for those taking out larger mortgages, it would be better value to go for a cash-back mortgage.