Best and worst: Best Value Mortgage Lenders

CHOOSING the right mortgage could save a borrower up to pounds 8,000 over the life of a 25-year mortgage. A survey carried out for What Mortgage magazine, using figures from Mortgage Link, the independent mortgage supplier, found that the best value was offered by some small lenders that do not have the expenses of a vast branch network.

Each of the most expensive lenders had different reason for the higher rates charged. David Charlton, assistant general manager of Skipton Building Society, said the society had kept its mortgage rates higher than normal because it wanted to be able to continue to offer a higher competitive interest rate to its savers.

Two years ago, the Government launched a National Savings Bond with a high interest rate, which threatened to draw a lot of money away from societies. Despite the Government's decision to cut interest rates on the bond, Skipton decided to keep deposit rates high in order to hold on to its savers - and had to keep mortgage rates up.

Mr Charlton said: 'We wrote to customers explaining why it was necessary.' The differential between the Skipton's loan rate and the average loan rate was now closing.

The former TSB Northern Ireland, now no longer owned by TSB and called First Trust Bank, put its expensive loan rate down to the fact that it charged extra in Northern Ireland because local market conditions - especially unemployment - resulted in a higher default rate.

Chesham Building Society has maintained a policy of charging about 0.25 per cent less than the Halifax's variable rate. The Chesham's small four-branch network enables it to keep its costs down. However, the society will only lend in Buckinghamshire, Bedfordshire, Hertfordshire, Berkshire, Surrey and Oxfordshire.

The five-branch Hanley Economic Building Society has also been able to keep its rates down because of economies of scale. Again it restricts the areas in which it can lend money. It operates in Staffordshire, Cheshire and Shropshire.

----------------------------------------------------------------- BEST VALUE MORTGAGE LENDERS ----------------------------------------------------------------- The best Total paid, pounds 1 Chesham . . . . . . . . . . . . . . . . . . . . 146,117.70 2 Hanley Economic . . . . . . . . . . . . . . . . 147,278.97 3 Tipton & Coseley . . . . . . . . . . . . . . . .147,523.62 4 Chorley & District . . . . . . . . . . . . . . .147,629.00 5 Cambridge . . . . . . . . . . . . . . . . . . . 148,183.80 The worst 60 Skipton . . . . . . . . . . . . . . . . . . . .151,782.32 61 TSB No Ireland . . . . . . . . . . . . . . . . 152,626.15 62 Swansea . . . . . . . . . . . . . . . . . . . .152,984.97 63 City & Metropolitan . . . . . . . . . . . . . .153,883.22 64 BNP Mortgages . . . . . . . . . . . . . . . . .154,086.45 ----------------------------------------------------------------- Figures show the total cost of borrowing pounds 50,000, based on the past 10 years extended over 25 years. Source: What Mortgage -----------------------------------------------------------------