Need a specialist loan? Go local

Regional lenders could well be the way of the future, says Christopher Browne

You've read the ads, surfed the net and talked to your broker in your hunt for a mortgage. But have you checked out your local possibilities? Biggest is not always best when it comes to borrowing money to buy certain types of properties.

One couple who could vouch for this are Richard and Janine Owen, who bought a converted Napoleonic tower in Folkestone, Kent. After spotting the property, the couple made an offer and contacted their bank for a mortgage. "Though the bank was one of the big five, it didn't seem at all interested - probably because it's an unusual type of home - so we shopped around and found a local lender who knew all about towers," says Janine, a tax consultant.

The society the Owens approached was the 150-year-old Kent Reliance, based in Chatham, north Kent. "The staff were very hands-on and understood exactly what we wanted," says Owen. The couple paid £100,000 for the Martello tower, one of 74 south coast forts built to defend the coast during the Napoleonic wars.

The Owens, who have just remortgaged their reassuringly solid home with Kent Reliance, are converting the kitchen and one of two bathrooms in the two-bedroom tower after adding a third-floor to cope with the needs of a growing family - they have two children.

A recent valuation says the 200-year-old, Grade-II listed house will sell for £500,000 after the revamp. Kent Reliance, which has 30 local branches and agents, now has its own "special" loan for local buyers interested in the oast houses, windmills, converted dovecotes, castles and towers scattered around the county. It's a fixed and tracker loan at 5.5 per cent and 4.75pc respectively. "It's half-and-half, which makes it flexible enough for people to hedge their bets during the current interest-rate uncertainty," says Mike Lazenby, Kent's marketing director. The loan can also be renewed - or rolled over - every two years without a redemption penalty.

There are around 50 regional lenders in the UK. Though most do nationwide mortgages, many of them concentrate on their home territory. "The advantage of using a regional lender is they have specialist knowledge of both the area and the different types of local properties,"says Bernard Clarke of the Council of Mortgage Lenders.

And when you go local, you work with one adviser, instead of a call centre. The Chesham, founded in 1845 and the world's oldest building society, has four branches in Buckinghamshire with 38 advisers. When you contact it for a loan, you always speak to a named adviser who will ask about your status, income and personal circumstances. "We like to look at the individual and his or her ability to pay rather than going to the credit-referencing agencies," says Emma Cull of Chesham. Among two of the Chesham's latest offers are a two-year, fixed-rate mortgage at 3.44 per cent, a three-year fix at 4.99pc and a five-year one at 5.09pc - all are rated highly on the respected www.moneyfacts.co.uk charts.

Some city dwellers can go to regional lenders - Leeds and Holbeck, Chelsea, Newcastle, Bristol and West, Birmingham Midshires, Nottingham, Coventry and Swansea building societies are examples - but Londoners may miss out. Broker Ian Armstrong of Surrey-based Mantle & Partners says: "Though many of our clients are London-based and have no handy local lenders,we recently recommended two borrowers to a Sussex-based one with specialist knowledge."

Local lending could well be the mortgage of the future. With the Financial Services Authority monitoring advisers and brokers more closely, many homeowners may begin going to smaller regional lenders direct, particularly if they have been recommended by a friend or neighbour, instead of paying for the middle-man.