It's collective bargaining

A new type of mortgage deal where people pool their buying power to get a cheaper rate was launched this week.

"Bulk-buy" home loans are the brainchild of mortgage broker Charcol. How they work is that the more people who apply, the lower the rate you'll pay. Charcol this week unveiled its first three bulk-buy mortgages - a two-year discounted rate loan, a two-year fixed rate, and a flexible fixed rate aimed at people looking to remortgage.

Teaming up with other people in order to drive down costs has obvious attractions, but it's fair to say that the concept of collective buying hasn't exactly set the retail world alight so far. The best-known player in this field is online retailer LetsBuyIt.com - whose advertising campaign features ants - which has run into highly-publicised financial difficulties.

The company's business model won praise but in the end it wasn't able to deliver the goods. Perhaps it's simply because most of us prefer to browse in shops and showrooms when buying products LetsBuyIt.com has specialised in, such as electrical items and toys. But some experts argue that less tangible products such as mortgages and pensions lend themselves much better to collective buying over the net or phone.

Charcol isn't too fazed by LetsBuyIt.com's woes and is confident that bulk-buy mortgages will be a hit. All three of its new mortgages work in the same way: each offers what it says is a "market leading" rate even before any reductions are made or benefits added. Each time the number of people applying for the deals passes a set level the rate is cut slightly or an extra perk is added.

After two weeks (or if the mortgage sells out before then), provided enough people have applied, everyone gets the mortgage at the discounted rate. There is an upfront £49 reservation fee but you can pull out and have this refunded if you decide not to proceed because not enough people have signed up. People will be able to check levels of take-up by logging on to Charcol Online.

The first three deals are:

• A loan giving 2.55% off the standard variable rate for the first year and a 2.45% discount in the second year (giving an initial rate of 5.19% and then 5.29%) from Birm ingham Midshires. The deal is available to those with a deposit of 5%-plus, but there is a £299 arrangement fee and early redemption penalties for the first two years. Provided enough people come forward, the discount in the second year will be upped to 2.5% and up to £400 cashback will be thrown in.

• A loan fixed at 5.45% for two years for those able to stump up a deposit of at least 25%, or 5.65% for those who can only manage a 10% deposit. The lender is GMAC, the loans business owned by General Motors. There is a £295 arrangement fee and no redemption penalties. The bulk-buy enhancements would see the rates cut to 5.39%/5.59% and up to £385 of cashback provided.

• A flexible deal only open to people remortgaging, fixed at 5.59% for two years, funded by the Woolwich. You need a deposit of 10%-plus, and there is no arrangement fee, but there are redemption penalties within the two years. The perks, provided enough people apply, include up to £650 cashback.

Charcol says that as the service develops it plans to offer a range of bulk-buy deals. However, a situation could develop where those interested will wait for someone else to make the first move. A spokeswoman concedes there is a "possibility" that everyone will wait for everyone else to act. "I'm sure some people will hang back to see what happens," she says. "But all of these are market-leading products."

Mortgages aren't the only area where you can group together to drive down costs. Independent financial adviser Hargreaves Lansdown has a website allowing people to pool purchasing power to get the best deal on per sonal pensions. HL Pensions is launching a new offer enabling people to buy a stakeholder-compliant personal pension free of all charges until April and which after that has a maximum annual management charge of 0.8% - significantly less than many providers will be charging once the stakeholder pension regime comes into force.

It can offer such attractive terms because it can go to the insurance company and buy on behalf of a large number of individuals. More than 150 people have registered for the offer since the last once closed at the beginning of December.

Stakeholder pensions are a new type of personal pension which go on sale on April 6. With these, the maximum amount a company can charge you for managing your funds is 1% a year and they will be portable. The pension offered by Bristol-based Hargreaves Lansdown beats many of the stakeholder minimum terms - the annual charge starts at 0.8% and starts falling once the fund value reaches £10,000. The offer is open until the end of February.