The cheapest and the dearest

If you took out a standard pounds 50,000 mortgage nine years ago with one of the cheaper lenders rather than one of the most expensive, you would have saved pounds 4,000 in interest to date, according to the Consumers' Association.

Which?, the Consumers' Association magazine, has analysed and compared the standard mortgage rates of 96 lenders over a nine-year period.

The most expensive lenders have been Bristol & West (currently with an 8.44 per cent standard variable rate mortgage), City & Metropolitan, The Mortgage Corporation, Norwich and Peterborough, Teachers, Standard and, finally, Western Trust.

Two more, Legal & General and Ecology, have also been more expensive, the report says.

Four lenders have been significantly cheaper than average. They are Chesham (currently with a 7.9 per cent standard-rate mortgage), Chorley and District (7.55 per cent depending on the size of mortgage), Penrith (7.75 per cent) and Stafford Railway (7.99 per cent).

A lender's standard variable rate - its core lending rate - is an important consideration when choosing a mortgage. The mortgage price war has led to a proliferation of tempting deals, both in fixed-rate and discounted products. But they tend to come with "handcuffs" that lock the borrower in to the standard rate for varying lengths of time after the incentive expires.

This means that the cheapest rates on offer (shown every week in our borrowing tables) are not necessarily the most suitable. Homebuyers should examine the terms and conditions carefully.

Which? also examined the largest 20 lenders to compare their redemption charges and the flexibility of their existing standard-rate products. The table above shows the standard variable rate of each lender together with the minimum amount you must make in extra payments to have the mortgage balance reduced.

Both Lloyds Bank and Midland Bank emerge as the most flexible of the big lenders, with no redemption charges and no minimum payment requirement to reduce the amount of the mortgage principle.

If you want a fixed-rate mortgage giving you the security of knowing your monthly payments will not change, the best deals work out at around 5 per cent for a one-year fix and just under 9 per cent for a five-year fix. But remember, some economists believe that interest rates have peaked, so a five-year fix at a good half-point above the current standard variable rate could prove very expensive.

If you want a fix, Which? recommends, among others, Bank of Ireland, National & Provincial and Norwich and Peterborough for one-year fixes, and Alliance & Leicester, Skipton and TSB for five-year fixes.

If you choose a discounted-rate loan, the discounted rate goes up or down by the same amount as any change in the base rates. A two-year discounted rate loan, for example, would give you the benefit of any fall in interest rates over the next two years. After that, you return to the lender's variable rate.

The best discounted rates are currently around 2.5 per cent for a year and 5.5 per cent for two years.

If you are looking for cash incentives, typical cashback offers on fixed and discounted deals are typically around pounds 200 to pounds 500.