Phone deal cuts mortgage costs

IF YOU are one of the 2.7 million motorists who insure with Direct Line, and are aged between 30 and 50, the chances are you will have received a mail-shot asking if you would like to switch your mortgage from your existing borrower to the company.

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.

PROMOTED VIDEO
Arts and Entertainment
Robert De Niro, Martin Scorsese and DiCaprio, at an awards show in 2010
filmsDe Niro, DiCaprio and Pitt to star
News
i100
News
In this photo illustration a school student eats a hamburger as part of his lunch which was brought from a fast food shop near his school, on October 5, 2005 in London, England. The British government has announced plans to remove junk food from school lunches. From September 2006, food that is high in fat, sugar or salt will be banned from meals and removed from vending machines in schools across England. The move comes in response to a campaign by celebrity TV chef Jamie Oliver to improve school meals.
science
Sport
England captain Wayne Rooney during training
FOOTBALLNew captain vows side will deliver against Norway for small crowd
Life and Style
Red or dead: An actor portrays Hungarian countess Elizabeth Báthory, rumoured to have bathed in blood to keep youthful
health
News
peopleJustin Bieber charged with assault and dangerous driving after crashing quad bike into a minivan
News
ebooksAn unforgettable anthology of contemporary reportage
News
peopleHis band Survivor was due to resume touring this month
News
people'It can last and it's terrifying'
Life and Style
fashionModel of the moment shoots for first time with catwalk veteran
Sport
Radamel Falcao poses with his United shirt
FOOTBALLRadamel Falcao's journey from teenage debutant in Colombia to Manchester United's star signing
Life and Style
fashionAngelina Jolie's wedding dressed revealed
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Front-Office Developer (C#, .NET, Java,Artificial Intelligence)

£30000 - £45000 per annum + benefits+bonus+package: Harrington Starr: Front-Of...

C++ Quant Developer

£700 per day: Harrington Starr: Quantitative Developer C++, Python, STL, R, PD...

Java/Calypso Developer

£700 per day: Harrington Starr: Java/Calypso Developer Java, Calypso, J2EE, J...

SQL Developer

£500 per day: Harrington Starr: SQL Developer SQL, C#, Stored Procedures, MDX...

Day In a Page

Chief inspector of GPs: ‘Most doctors don’t really know what bad practice can be like for patients’

Steve Field: ‘Most doctors don’t really know what bad practice can be like for patients’

The man charged with inspecting doctors explains why he may not be welcome in every surgery
Stolen youth: Younger blood can reverse many of the effects of ageing

Stolen youth

Younger blood can reverse many of the effects of ageing
Bob Willoughby: Hollywood's first behind the scenes photographer

Bob Willoughby: The reel deal

He was the photographer who brought documentary photojournalism to Hollywood, changing the way film stars would be portrayed for ever
Hollywood heavyweights produce world's most expensive corporate video - for Macau casino

Hollywood heavyweights produce world's most expensive corporate video - for Macau casino

Scorsese in the director's chair with De Niro, DiCaprio and Pitt to star
Angelina Jolie's wedding dress: made by Versace, designed by her children

Made by Versace, designed by her children

Angelina Jolie's wedding dressed revealed
Anyone for pulled chicken?

Pulling chicks

Pulled pork has gone from being a US barbecue secret to a regular on supermarket shelves. Now KFC is trying to tempt us with a chicken version
9 best steam generator irons

9 best steam generator irons

To get through your ironing as swiftly as possible, invest in one of these efficient gadgets
England v Norway: Wayne Rooney admits England must ‘put on a show’ to regain faith

Rooney admits England must ‘put on a show’ to regain faith

New captain vows side will deliver for small Wembley crowd
‘We knew he was something special:’ Radamel Falcao's journey from teenage debutant to Manchester United's star signing

‘We knew he was something special’

Radamel Falcao's journey from teenage debutant to Manchester United's star signing
'I’ll tell you what I would not serve - lamb and potatoes': US ambassador hits out at stodgy British food served at diplomatic dinners

'I’ll tell you what I would not serve - lamb and potatoes'

US ambassador hits out at stodgy British food
Radio Times female powerlist: A 'revolution' in TV gender roles

A 'revolution' in TV gender roles

Inside the Radio Times female powerlist
Endgame: James Frey's literary treasure hunt

James Frey's literary treasure hunt

Riddling trilogy could net you $3m
Fitbit: Because the tingle feels so good

Fitbit: Because the tingle feels so good

What David Sedaris learnt about the world from his fitness tracker
Saudis risk new Muslim division with proposal to move Mohamed’s tomb

Saudis risk new Muslim division with proposal to move Mohamed’s tomb

Second-holiest site in Islam attracts millions of pilgrims each year
Alexander Fury: The designer names to look for at fashion week this season

The big names to look for this fashion week

This week, designers begin to show their spring 2015 collections in New York