A new Scotland-based company, emfinance.com, will next month launch as the UK's first online mortgage company, offering a range of Internet-based mortgage products to financial intermediaries and direct to net-based customers.

The company, based in Livingston, said it had arranged funding support of more than £1 billion sterling (€1.58 billion) from a panel of established lenders, including Woolwich and Royal Bank of Scotland. This will back a range of products branded under the emfinance.com name.

Mr Gerry O'Neill, founder and managing director of emfinance.com, a subsidiary of eXchange Holdings, the quoted financial website group, said the company expected to win more than 3 per cent of the UK home loans market within three years.

He expected roughly half the business to come from sales directly to home-based Internet users and half from financial intermediaries.

Mr O'Neill said the company was designed not so much to compete with traditional mortgage lenders as to offer them a "partnership" for online distribution.

Mr Kevin Friend, sales and marketing director, said the start-up aimed partly to offer existing institutions a shortcut for putting their products online. "Many institutions clearly want to get into this space, and this is an opportunity for them to distribute their products quickly and not rely on their own in-house technological developments," he said. The company envisages eventually offering more than mortgage products.

It will launch with a staff of 35 in Livingston and has invested about £2 million in technology, software and training.

Both direct and institutional users of the service would use a common website interface to apply for and process mortgage applications. Some documentation would be required, at least at first, the company said. It expects "significantly" to cut the processing time for mortgages from several weeks to a few days.

The lower costs of online processing are expected to lead to lower mortgage product prices.

It said it would offer free building and household insurance for borrowers for the first three months, and free accident, sickness and employment cover for the first six months.