Deals coming to a screen near you

A mortgage that allows borrowers to walk away with a free 42-inch Sony plasma screen TV was launched this week. It has sparked renewed debate about the tactics used by lenders to entice people to take on debt.

This week also saw a division of Bradford & Bingley come under fire for offering a mortgage that allows homebuyers to borrow up to 130% of the value of their property - in effect, putting them into negative equity from day one.

And it has emerged that several providers, including Northern Rock and Royal Bank of Scotland, have relaxed their lending rules on buy-to-let mortgages, allowing amateur landlords to borrow more money.

Banks and building societies seem to be offering ever-greater incentives to get us to sign on the dotted line. Some will label these new deals gimmicky or irresponsible, but there are clearly going to be people who find them tempting. So are they any good?

The short answer when it comes to the "plasma mortgage" offered by Scarborough building society is that for most people it is probably not a good deal, but it does offer good value for a small minority.

This mortgage is available to homebuyers and remortgagers in two forms: a five-year loan fixed at 5.49%, and a base rate tracker where you pay base rate plus 0.24% for the first year, giving a 4.99% initial rate, then base rate plus 1.04% for the remaining term, which means 5.79% as things currently stand.

The incentive is "a state of the art" Sony WEGA 42-inch plasma TV - recommended retail price: £3,299.99 - delivered free to your door.

And that's not the end of the freebies. Scarborough is also throwing in £250 cashback and a refund of the valuation fee. But, of course, there are strings attached. In both cases there are early redemption penalties tying you in for five years. In the case of the fixed rate, a £495 completion fee. Minimum loan is £50,000 and you have to stump up a deposit of at least 10%.

However, the main problem is that for most people the rates aren't competitive. Simon Tyler, at mortgage broker Chase De Vere Mortgage Management points out that Nottingham building society is offering a tracker pegged at 0.18% above base rate for five years, giving a pay rate of 4.93%. This is free of legal and valuation fees for remortgagers (minimum deposit is 25%).

Meanwhile, the Portman and Britannia building societies offer five-year fixed rate deals at 4.89% -much cheaper than the plasma loan. Both will lend up to 95% of the property's value, though there are fees to pay.

In other words, says Mr Tyler, the Scarborough mortgage is priced so most people will be paying for the TV through the higher rate. But it might make sense for small mortgages. "On a £50,000 loan you'd basically be getting a £3,300 TV for just over £1,000 in extra interest compared to the market-leading deals."

Ray Boulger, at fellow broker Charcol, agrees. He says the deal offers good value at around the £50,000 mark and is OK a little above this, "providing you want the plasma TV" - but isn't really a runner for people borrowing £90,000-plus.

Meanwhile, those struggling to get on the housing ladder will be intrigued by "Max 130," a controversial new loan launched by Bradford & Bingley's Mortgage Express arm which allows first-time buyers, home movers and those remortgaging to borrow up to 130% of their property's value.

There are two rates: 6.49% fixed for three years and a discounted deal where the current pay rate is 6.24% (0.31% off the lender's standard variable rate for two years). The maximum loan amount over the property's value is 30%, subject to a maximum £30,000, and there are redemption penalties during the fixed/discounted period.

With house prices teetering, these sorts of deals are very risky, says Mr Tyler. Even if there isn't a crash, it may take years for someone who borrows an extra 25%-30% of the house price to see their property rise out of negative equity.

Mr Boulger reckons Max 130 may suit a few borrowers, but that for most people, similar deals offered by Northern Rock and Coventry building society will work out cheaper. Both lenders will let people borrow up to 95% in the normal way, and then an additional sum as an unsecured personal loan.