Looking for a mortgage? Try the supermarket...

Food giants Tesco and Sainsbury are going big on home loans. But are their products any good or should customers shop around for a better deal elsewhere?

By this time next month, Tesco shoppers at 650 stores around the country will be able to buy a mortgage along with the cornflakes. Sainsbury customers can already buy home loans in all the chain's 432 UK stores. Virgin is thinking of selling its own mortgages through 310 Our Price or Virgin Megastore branches.

By this time next month, Tesco shoppers at 650 stores around the country will be able to buy a mortgage along with the cornflakes. Sainsbury customers can already buy home loans in all the chain's 432 UK stores. Virgin is thinking of selling its own mortgages through 310 Our Price or Virgin Megastore branches.

Last week Tesco tripled the number of stores selling its mortgage range from 100 to 300. The chain has plans to offer home loans through all 650 stores by the beginning of September. Tesco Personal Finance spokesman Mark Austin says: " It's still early days, but there does seem to be genuine interest, which is why we are increasing the number of stores that it is available through."

But how do the two rival mortgage ranges compare? Are the goods on offer the sort of prestige items you would leave on show at a dinner party or just cheap own-brand alternatives which you push to the back of the kitchen cupboard?

In Tesco's case, the store acts as a gateway for a range of existing loans selected by independent mortgage advisers John Charcol. The loans are backed by lenders such as the Woolwich and Yorkshire Building Society, but badged as Tesco Special products. Tesco's mortgages include flexible, fixed rate, discount and first time buyers' deals.

Sainsbury backs its own loans through Sainbury's Bank, a joint venture with Bank of Scotland. It offers flexible, discount, fixed, variable and buy-to-let loans, as well a fixed/variable hybrid.

Simon Tyler is managing director of Chase de Vere Mortgage Management, another firm of independent mortgage advisers. He says the Charcol link has given Tesco a better selection of mortgages than Sainsbury can offer. But Tyler is equally sure that determined mortgage buyers could get a better deal than either supermarket offers by shopping around among more traditional providers.

Tyler says: "I don't want to criticise Sainsbury, because they are doing an OK job. But, quite clearly, if you wanted the best, you wouldn't go there. It's the convenience and the brand you are buying into. If you want the cheapest, you go looking elsewhere.

"The Tesco range is superior to the Sainsbury range, because they are using more than one supplier and Charcol is choosing the loans for them. You could get slightly better rates, but if you want to do it without a fee and with the convenience of dealing via the Net or via a phone centre, then Tesco offers a good solution."

Both chains distribute leaflets through their stores, but insist on taking all applications electronically. Sainsbury uses a freefone telephone number and Tesco uses e-mail. Tesco buyers can opt to switch to telephone support once their initial e-mail application is accepted.

With staff on every high street, the big supermarket chains may seem ideally placed to offer more personal help with the mortgage process. But Austin is not sure this would prove either practical or popular. He says: "We have no plans to develop face-to-face advice in stores. It is very difficult to control the quality of that sort of service across a wide geographic range with training and everything else. With it being centralised, the quality control aspect is stronger for us.

"People want to get information on products through the stores, but ultimately, they don't want to sit there and let their frozen peas defrost while they talk about mortgages."

Whatever problems Virgin might face with its own plans, frozen peas are not among them. This is one distinction which may help to make personal advice in-store a more realistic proposition. Virgin says that it envisages something resembling a personal finance desk in Our Price and Megastore outlets.

Virgin spokesman Scott Mowbray says: "We are looking at a concept whereby we could distribute through 220 Our Price stores and 90 Virgin Megastores. There would be information there, and the ability to talk through an application and decide whether it is right for the customer."