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.

Start your day with The Independent, sign up for daily news emails
News
Keith Fraser says we should give Isis sympathises free flights to join Isis (AFP)
news
Life and Style
A picture taken on February 11, 2014 at people walking at sunrise on the Trocadero Esplanade, also known as the Parvis des droits de l'homme (Parvis of Human Rights), in front of the Eiffel Tower in Paris.
techGoogle celebrates Paris's iconic landmark, which opened to the public 126 years ago today
News
Cleopatra the tortoise suffers from a painful disease that causes her shell to disintegrate; her new prosthetic one has been custom-made for her using 3D printing technology
newsCleopatra had been suffering from 'pyramiding'
News
people
Arts and Entertainment
Coachella and Lollapalooza festivals have both listed the selfie stick devices as “prohibited items”
music
Sport
Nigel Owens was targeted on Twitter because of his sexuality during the Six Nations finale between England and France earlier this month
rugbyReferee Nigel Owens on coming out, and homophobic Twitter abuse
ebooks
ebooksA special investigation by Andy McSmith
  • Get to the point
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

Ashdown Group: Trainee Consultant - Surrey / South West London

£22000 per annum + pension,bonus,career progression: Ashdown Group: An establi...

Ashdown Group: Trainee Consultant - Surrey/ South West London

£22000 per annum + pension,bonus,career progression: Ashdown Group: An establi...

Recruitment Genius: Client Services Assistant

£18000 - £20000 per annum: Recruitment Genius: A Client Services Assistant is ...

Ashdown Group: Junior Application Support Analyst - Fluent German Speaker

£25000 - £30000 per annum + benefits: Ashdown Group: A global leader operating...

Day In a Page

No postcode? No vote

Floating voters

How living on a houseboat meant I didn't officially 'exist'
Louis Theroux's affable Englishman routine begins to wear thin

By Reason of Insanity

Louis Theroux's affable Englishman routine begins to wear thin
Power dressing is back – but no shoulderpads!

Power dressing is back

But banish all thoughts of Eighties shoulderpads
Spanish stone-age cave paintings 'under threat' after being re-opened to the public

Spanish stone-age cave paintings in Altamira 'under threat'

Caves were re-opened to the public
'I was the bookies’ favourite to be first to leave the Cabinet'

Vince Cable interview

'I was the bookies’ favourite to be first to leave the Cabinet'
Election 2015: How many of the Government's coalition agreement promises have been kept?

Promises, promises

But how many coalition agreement pledges have been kept?
The Gaza fisherman who built his own reef - and was shot dead there by an Israeli gunboat

The death of a Gaza fisherman

He built his own reef, and was fatally shot there by an Israeli gunboat
Saudi Arabia's airstrikes in Yemen are fuelling the Gulf's fire

Saudi airstrikes are fuelling the Gulf's fire

Arab intervention in Yemen risks entrenching Sunni-Shia divide and handing a victory to Isis, says Patrick Cockburn
Zayn Malik's departure from One Direction shows the perils of fame in the age of social media

The only direction Zayn could go

We wince at the anguish of One Direction's fans, but Malik's departure shows the perils of fame in the age of social media
Young Magician of the Year 2015: Meet the schoolgirl from Newcastle who has her heart set on being the competition's first female winner

Spells like teen spirit

A 16-year-old from Newcastle has set her heart on being the first female to win Young Magician of the Year. Jonathan Owen meets her
Jonathan Anderson: If fashion is a cycle, this young man knows just how to ride it

If fashion is a cycle, this young man knows just how to ride it

British designer Jonathan Anderson is putting his stamp on venerable house Loewe
Number plates scheme could provide a licence to offend in the land of the free

Licence to offend in the land of the free

Cash-strapped states have hit on a way of making money out of drivers that may be in collision with the First Amendment, says Rupert Cornwell
From farm to fork: Meet the Cornish fishermen, vegetable-growers and butchers causing a stir in London's top restaurants

From farm to fork in Cornwall

One man is bringing together Cornwall's most accomplished growers, fishermen and butchers with London's best chefs to put the finest, freshest produce on the plates of some of the country’s best restaurants
Robert Parker interview: The world's top wine critic on tasting 10,000 bottles a year, absurd drinking notes and New World wannabes

Robert Parker interview

The world's top wine critic on tasting 10,000 bottles a year, absurd drinking notes and New World wannabes
Don't believe the stereotype - or should you?

Don't believe the stereotype - or should you?

We exaggerate regional traits and turn them into jokes - and those on the receiving end are in on it too, says DJ Taylor