DIRECT LINE has launched a mortgage package, Living for Less, which includes discounted home insurance and free home-emergency cover for two years. But it may be cheaper to buy this cover elsewhere.

There is a choice of four mortgage deals in the Living for Less range: a two-year tracker at 4.5%; a two and three-year fix, both charging 4.74%; and a five-year fix at 4.84%. But to get these rates borrowers must take out buildings and contents insurance with Direct Line.

David Allen at Direct Line said: “As our lives become more hectic, customers are increasingly looking for hassle-free financial products that save them both time and money.”

But there is no guarantee that this is the cheapest option because the mortgage rates are not market-leading and the overall value of the package depends largely on the home-insurance quote. You will get a 20% discount on the premium, another 5% off if you apply online and another 5% off if you have motor insurance with Direct Line. You should still shop around, though, because there may be better deals from other insurers.

Direct Line also includes two years’ free Home Response. This insures against home emergencies such as plumbing, drainage or electrical problems. Direct Line says this is worth £71.55 a year, but that is only the case if you wanted to buy such cover separately.

David Hollingworth at L&C Mortgages, a broker, said: “This is basically a compulsory-insurance mortgage product because if the insurance isn’t taken the borrower must opt for the higher rates of Direct Line’s standard deals. And mortgages with compulsory insurances have all but disappeared because they tend not to offer best value.”

The Living for Less fixed- rate mortgages are all beatable by quite a margin. The best five-year fix is from Newcastle building society at 4.54% — 0.3 percentage points cheaper than Direct Line’s. Direct Line does offer free legal work and valuation on remortgages, which are not included in the Newcastle deal, but even so there are better five-year products elsewhere.

First Active has a five-year fix at 4.7% that includes free legal work and valuation on remortgages.

Ray Boulger at John Charcol, a broker, said: “Anyone who wants a fixed-rate mortgage can almost definitely get a better deal elsewhere, buying the insurance separately. The two-year tracker looks competitive for those remortgaging, although whether the total package works out cheaper depends on the cost of the insurance.”

Your premium will vary depending on where you live, your claims history and the claims history of the insurer in that area. So Direct Line will not be competitive for everyone.

Hollingworth said: “The broker we recommend our clients use for their home insurance has compared Direct Line quotes with the best he could find, and on average Direct Line was 33% more expensive. In one instance it was 46% more.”

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