Wealth of providers move the home loan hunt into cyberspace

For house-buyers willing to take out a mortgage over the internet, the choice of providers is ever expanding.

Today sees the launch of what is described as Britain's first internet mortgage broker. And this week, the leading US internet-based mortgage provider E-LOAN said it aims to open for business in Britain by the end of the year.

Some mortgage brokers and lenders already offer people the chance to apply for a mortgage online, but the new venture, called emfinance.com, is entirely net-based. The venture has been launched by the eXchange, an internet financial services company founded eight years ago which floated on the stock market in August.

Emfinance.com has linked up with major lenders, including the Woolwich, Bristol & West and Birmingham Midshires, to offer a range of "exclusive" mortgages online.

They include a tracker mortgage pegged at 0.65% above base rate for the lifetime of the loan (giving a current interest rate of 5.9%) with no early redemption penalties. Another deal is modelled on the Woolwich's Open Plan flexible mortgage with a lifetime discount of 0.5% off the standard variable rate (currently 6.64%) and redemption penalties for the first 12 months. These two mortgages result from tie-ups with Market Harborough building society and the Woolwich respectively.

The mortgages come with six months' free accident, sickness and unemployment insurance, and three months' buildings and contents insurance. The company also offers a facility allowing customers to track the process of their mortgage from application to completion, 24 hours a day, by inputting a password.

As with other firms, borrowers can fill in the application form on-screen and send it down the line to the company, which then mails the customer a hard copy of the completed form which they must sign and mail back.

"There is a legal requirement for application forms to have a hard signature," explains emfinance.com managing director Gerry O'Neill, who is lobbying for this restriction on companies to be lifted. "I think that at some point next year we will have electronic signatures," he predicts.

In the US, E-LOAN allows borrowers to search for, compare and apply for approximately 50,000 mortgage products entirely online.

Useful sites for those looking to take out a mortgage include:

Interactive Investor International
Moneyextra
Financial Information Net Directory
Flexmortgage