Phone deal cuts mortgage costs
Sunday 14 May 1995
Direct Line is offering a current variable mortgage rate of 7.42 per cent, nearly a full point cheaper than many banks and building societies.
Direct Line's product is a straight repayment mortgage, only available for loans up to a maximum of 85 per cent of the valuation a surveyor will put on your property. But survey fees will be refunded when the mortgage is completed. All-inclusive legal fees are £300 maximum, and on a mortgage of £80,000 it will save you £50 a month.
Unlike the host of tempting fixed-rate and cash-back offers, the saving could last as long as the mortgage. The lender reckons to do this through avoiding the branch networks and staff costs that conventional lenders have.
Direct Line has a small sales force and no branches, and claims it can give you a formal yes or no to an application over the phone within 20 minutes. If the answer is yes, it will send you a form to sign, arrange for a surveyor to call, check your financial details are correct and complete the mortgage.
Most other telephone sales systems use the phone to open negotiations and then require applicants to fill in a form and send it back, or attend a face-to-face interview. Direct Line's only real rivals are Bradford & Bingley Direct, Bank of Scotland Direct and First Direct. Details vary - for example, B&B charges 7.3 per cent and lends up to 75 per cent of valuation, but the principle is the same.
Like all other lenders, "phone-alone" lenders can raise or lower their rates in future in response to market forces, but the reduced rates are not intended as a loss leader. And there are no penalties for early redemption if you decide to move your mortgage again.
So is there a catch? No. Are they a best buy? That depends on how long you want to stay tied to a particular lender.
If you want one year of low mortgage payments, it is easy to get at least 3 per cent off with cashbacks and fees remitted, or up to 6 per cent off if you pay the survey and legal fees.
You can get up to 2.5 per cent a year off for two years or 2 per cent for three years and 1 per cent for five years. But you will have to repay the concessionary fee if you want to pay the loan off or remortgage again within two years after the low rate reverts to standard rate.
If you expect to stay in the same property for five years or more, a modest 0.9 per cent off from a phone-alone lender may be a better bet.
- 1 Rarest Beanie Baby bought for just £10 at car boot sale could be sold for £62,500 on eBay
- 2 Katie Hopkins and The Sun editor are reported to police for incitement to racial hatred following migrant boat column
- 3 Giorgio Armani criticises the way some gay men dress saying 'a man has to be a man'
- 4 Rebecca Francis accuses Ricky Gervais of using 'influence' to target female hunters after receiving barrage of death threats
- 5 Australian student Tommy Connolly, 23, adopts his pregnant, homeless 17-year-old cousin to give her a chance at 'a better life'
Rarest Beanie Baby bought for just £10 at car boot sale could be sold for £62,500 on eBay
Katie Hopkins and The Sun editor are reported to police for incitement to racial hatred following migrant boat column
'Jihadi John': Isis executioner Mohammed Emwazi wanted to wage jihad in Somalia until his friends were betrayed and killed by al-Shabaab
Parma, Missouri: 80 per cent of town's police quit after first black mayor is elected
Australian student Tommy Connolly, 23, adopts his pregnant, homeless 17-year-old cousin to give her a chance at 'a better life'
If I’m being racially abused I don’t need a stranger with a saviour complex to rescue me
The only black face in the Ukip manifesto is on the page about overseas aid
Ukip is the only main political party to not address LGBT rights in its manifesto
Food banks: One million Britons will soon be using them, according to Trussell Trust
Religion isn't growing, it is becoming vigorous in its demise, says philosopher AC Grayling
BBC election debate: The one photo that summed up the whole 90-minute leaders debate
iJobs Money & Business
£60000 - £70000 per annum + benefits : Ashdown Group: A highly successful, glo...
£30 - 35k (DOE): Guru Careers: We are seeking a Pricing Analyst with experienc...
£24000 - £26000 per annum + benefits : Ashdown Group: A highly successful, glo...
£21000 - £24000 per annum: Ashdown Group: The Ashdown Group has been engaged b...