Where to get a hearing if society won't listen

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Building societies dominate the home loan market, lending nearly two-thirds of all outstanding mortgages. But those borrowers prepared to look beyond their local society branch will find a wide range of mortgages on offer.

Phillip Cartwright, of London & Country, an independent mortgage broker in Bath, says 90 per cent of his firm's business is placed with building societies. "Clients tend to feel more comfortable with them, because they have well-known names and a presence on the high street," he says. "But someone who wants a very flexible mortgage or has found it difficult to borrow through the main lenders may be better off considering the alternative lenders."

There are three main types of alternative lender: the banks, telephone- based mortgage companies, and the so-called centralised lenders. Each group offers different products and sells through different channels. Banks such as Barclays and NatWest sell loans through their branches or life insurance sales forces. But despite their heavy presence on the high street, they hold just one third of the mortgage market.

Mr Cartwright attributes their relatively small market share to a lack of competitive products. "NatWest is the only one I'd rate at all. It treats its existing borrowers in a reasonable way and has some interesting loans. The other banks don't really feature in terms of attractive interest rates. They've relied on selling to bank customers."

NatWest offers a wide selection of fixed-rate loans, ranging from 7.75 per cent for five years to 9.75 per cent for 13, 18 or 21 years. However, borrowers interested in fixing their loans should be aware of redemption penalties.

Centralised lenders are so-named because they operate from a single, central office. They tend to rely on mortgage brokers to distribute their products, rather than selling through a branch network.

Some of these lenders have earned a reputation for being tough with peole who fall behind on their payments, while others charge higher rates of interest for "high risk" customers. However, they can still be a good source of money for people who need to borrow on unusual terms. Borrowers stuck with negative equity problems should check out Mortgage Express (0500 050020), The Mortgage Business (0800 454662) and Kensington Mortgage Company (0800 111020).

Kensington also lends to people who have only worked for their current employer for a short period or have notched up county court judgments.

Loans for self-employed workers are available from Capital Home Loans (01252 365813), UCB Home Loans (0645 401400), Mortgage Trust (0800 550551) and Mortgage Express. Loans for the full value of the property are sold by Legal & General Mortgages (0800 664444) and Mortgage Express.

Such loans can be complicated and the lenders often charge more than the normal market rate, so consult an independent broker before signing up.

The third type of alternative lender, the telephone-based company, is only suitable for borrowers who feel they can handle their own financial deals. Many building societies and banks operate a telephone-based subsidiary. Most offer exactly the same products sold through their branches, but it is worth looking out for exclusive deals available only to telephone customers.

Mr Cartwright says some telephone lenders are very competitive on standard variable rates. Woolwich Direct (0645 757575) offers variable-rate mortgages at 6.35 per cent to borrowers and remortgagers with a 15 per cent deposit. Direct Line (0181 649 9099) is charging 6.05 per cent for borrowers with a 10 per cent deposit, and Bradford & Bingley Mortgages Direct (0800 258258) has the cheapest rate currently at 5.99 per cent. However, the borrower must lodge a deposit of at least 25 per cent.

q `MoneyFacts' publishes details on the different mortgages available on a monthly basis. For a free copy, call 01692 500677.