Best mortgages

Standard Life Bank has won the award for best customer service in the mortgages category.

The bank was launched in January 1998 as a wholly owned telephone bank subsidiary of Europe's largest mutual life insurance company Standard Life and now claims to be Britain's fastest growing bank.

After starting out with competitive savings products, the bank launched its first mortgage product Freestyle - one of the new breed of flexible mortgages - in January 1999.

Freestyle's popularity has been such, particularly among remortgagers, that within the first year the bank completed ?4.1bn worth of mortgage business, acquiring 10,000 borrowers, and took 11.4% of net new lending in the market.

"Freestyle has been so successful because it's an excellent, flexible, easy to understand product that suits virtually all needs," says the bank's managing director Neil Ross. "It's very much a straightforward, single product so customers aren't confused by variation and it offers a very competitive interest rate."

With a standard variable rate of 6.75% and a discounted rate of 6.06% for the first six months of the mortgage (rates correct at time of going to press), there are neither arrangement fees nor compulsory insurance fees attached to Freestyle mortgages, which can be from ?25,001-?300,000, maximum 90% loan-to-value. A further incentive for new borrowers is free legal fees if they use the bank's panel of lawyers or ?200 towards fees charged by their own solicitor.

Freestyle's main claim to flexibility comes from the fact that the borrower can choose to overpay by lump sum or increased monthly payments whenever they like without penalty after the first year. So those who receive bonuses or lump sum windfalls can reduce their outstanding loan immediately. And because interest is calculated on a daily basis, they receive the immediate benefit of any overpayment.

On the other side of the flexibility coin, when there's a blip in a borrower's cashflow, they can ease their financial burden by opting to take up to two months' payment holidays each year (after six consecutive monthly payments).

Freestyle loans are made by the bank on the basis of 'affordability' tests rather than income multiples, which means customers may be offered more than they actually need to borrow at the time. In this case, the surplus remains available for drawdown at any time in the future with no extra hassle or charges.

In other words you can borrow whenever you like at the standard mortgage rate to fund major expenses like holidays, cars and home improvements. Overpayments are also available for drawdown at any time.

When someone rings the call centre to apply for a mortgage, they get through to a trained and experienced member of staff who asks them about their mortgage needs, the property, their income and outgoings, and carries out initial credit checks while they are chatting.

"We aim to reach the conditional offer stage after eight to nine minutes on the phone," says Mr Ross, "And we reckon on turning about 30% of calls into mortgages." The mortgage advance then comes through within about a month, allowing time for any further financial health checks to be made.

Apart from the attractiveness of the product and the simplicity and speed of the application process, the third important element from a customer services point of view is the quality of the bank's call centre staff.

"We use psychometric tests when selecting staff to pick out people-oriented people who get a buzz out of dealing with customers over the phone and we train them well so that they know the products inside out," Mr Ross says. "We aim to pick up on 100% of calls within six rings and are consistently hitting 98% which means people aren't left hanging on the line."

Since winning the award with Freestyle, Standard Life Bank has recently launched two new mortgage products, a fixed-rate loan and Freestyle Plus, a hybrid allowing customers to mix and match fixed and variable rates on portions of their loan. The bank is also promising to offer an internet mortgage application route later this year.