Personal finance: How the new home-loan schemes compare

The acid test of any new financial product is how it fits in with real human needs. That is why we have tested some of today's new "flexible mortgages" on Marianne Jones, 32, a typical reader of The Independent.

Marianne, who is an assistant features editor at Marie Claire, says: "I've always joined any pension scheme available. But beyond that, my approach to money isn't very organised.

"Of course, I'd be interested in finding ways of reducing the cost of borrowing, and having as much control as possible over my finances. On the other hand, I like the discipline of a repayment mortgage, where I can see the amount owed go down each month."

Marianne has a repayment mortgage of pounds 90,000 with First Direct, the telephone bank, which is discounted by 2 per cent from its current variable rate of 8.2 per cent for the first three years, on which she would pay pounds 8,120 a year at the full rate, which includes compulsory insurances. She also has a Visa credit card.

While she would currently face hefty penalties for redeeming her mortgage early, what might she hypothetically save (or pay) compared with First Direct's standard variable rate? We have chosen four typical flexible loans to find out.

Sainsbury's Options:

With a variable rate of 7.9 per cent, this mortgage would save Marianne 0.3 per cent on her monthly interest payments. A cheque book and drawdown facility are available. The pounds 6,000 she holds on deposit to offset future tax bills presently earns pounds 180 net of tax. Using this to reduce her loan would save pounds 414 in interest payments. But she would then have to take the money out again to pay her tax.

Annual mortgage payments are pounds 6,499.50 - a saving of pounds 1,620 a year, plus the pounds 414.

Mortgage Express's Choices: This mortgage would let Marianne borrow up to 105 per cent of the value of her flat, at a current variable rate of 8.75 per cent, just over half a percent to the cost of her First Direct loan. But she doesn't need the money. Again, she could use cash to reduce her borrowing, but draw on it again if needed.

On the pounds 90,000 mortgage, her annual cost would be pounds 7,481 per year, a saving of pounds 639 a year, plus the saving from interest.

Clydesdale Bank's Flexible Repayment Mortgage:

With a variable rate of 8.7 per cent this is expensive, but strangely still cheaper than First Direct's 8.2 per cent. It allows small lump sum repayments, calculating interest daily, but offers no drawdown facility.

Annual payments would be pounds 7,106, a saving of pounds 1,014 a year.

Virgin's One Mortgage:

A stepped interest rate starts at 8.1 per cent but goes up to 8.95 per cent for loans on a loan-to-value of 90 per cent or above. Marianne would pay 8.55 per cent based on the current value of her flat.

She could throw away her Visa card and borrow for consumer spending at a very competitive rate. Virgin also throws in free colour photographs of Richard Branson, so who can complain. But she always pays off her bills before the interest-free period is up.

The annual cost is pounds 7,310, a saving of pounds 810 a year, plus the interest "earned/saved" from her pounds 6,000 on deposit.

In every case, she would have to take out separate home and contents insurance. But it is unlikely that the cost of this would cancel out the savings from these mortgages.