Now a best-buy mortgage isjust a click away

Anew breed of mortgage website launched today aims to make it much easier for consumers to get home loans online. Mform.co.uk hopes to encourage more borrowers to search and buy home loans using the internet up to the levels seen in the general insurance market -- where more than 50 per cent of policies are bought online.

In contrast, the number of borrowers getting online mortgages is less than five per cent. Some mainstream lenders, including Abbey, Alliance & Leicester and Egg, do not even allow customers to apply online for mortgage deals.

Two of the biggest lenders, Nationwide and Halifax, have launched online applications, but did not do so until just a few months ago.

Mform, based in Edinburgh, is a free, impartial and independent mortgage search facility. It has details on mortgage products from across the market and -- where the lender has the ability -- it enables borrowers to apply online.

Chief executive Eamonn Rice believes the service will shake up the mortgage market. "Consumers are more financially savvy these days and they are demanding the tools to be able to search out the best deals for themselves and apply online," he says.

"But they want an independent service with no agenda in the products it recommends and that's where mform comes in.

"We carry no website advertising and receive the same commission from all lenders, so there is no bias or incentive for us to put certain lenders at the top of a best-buy table."

Mform is also set apart from rivals because it ranks best-buy mortgage deals by their total cost over the term of the deal taking into account any arrangement and exit fees. Other websites simply list deals by their best rate despite the fact that a high set-up fee could make them uncompetitive.

It also gives all lenders a star rating based on their service and allows users to click straight through to a chosen lender's online mortgage application -- where one is in place.

Other comparison websites link only with the lender's website homepage.

"Our aim is to cut out the middleman-says Rice. "The internet is already a dominant channel for insurance sales and we are confident the mortgage market can move the same way."

The major hurdle for mform and its users is how quickly lenders will sign up to the platform and develop their online application channels.

Mform currently has only 14 lenders signed up to its online click-through service that enables customer to proceed with their application online. Of these lenders, only a handful have full online application capability.

Borrowers who want a product from a non-subscribing lender -- or some advice -- will be told to call London & Country Mortgages, with which mform has a commercial arrangement, or to go direct to the lender.

Abbey, Alliance & Leicester, Halifax, Northern Rock, Chelsea Building Society, Skipton Building Society and Cheltenham & Gloucester are among the lenders already signed up to mform.

"Some lenders are waiting to gauge the success of mform, but I am confident most will sign up over the next few months," says Rice. "We currently have 61 per cent of the market signed up."

Steve Metcalf, 55, a project manager for a mail order firm, likes the ease and speed of searching for financial deals online. He lives with his wife Anne, 53, a museum attendant in Halifax, West Yorkshire, and the couple have two grown-up daughters.

He used the Charcol-online site to remortgage but says he had to do the sums himself to work out the best overall mortgage deal because Charcol ranks mortgage offers by interest rate only -- not rates and fees.

"We have a modest mortgage of 88,000 so one of the best deals Charcol suggested actually wasn't good value because, though the rate was low, the fees were high," says Steve.

"I calculated myself that Nationwide had the best loan for us -- it had a slightly higher rate but a low fee so over a two-year period it was cheapest.

"A website such as mform that shows total mortgage costs rather than best rates is more relevant."

Jonathan Cornell, director at independent mortgage broker Hamptons International in London, says: "A web-based mortgage system is fine if you are a squareshaped customer ready to fit neatly into the square-shaped box.

"But if you have slightly unusual or irregular circumstances, you will probably need to speak to someone.

"Similarly, first-time buyers usually require bespoke advice. A bit of hand-holding is normally required."