Building society mortgages: better than mortgages from a bank?
If you’re struggling to find a mortgage a building society may be a good place to start. Compared to many of the big banks, who have scaled down their mortgage lending in recent years, the building society sector increased theirs by 30% in 2012. One in five mortgage loans in the UK is offered through a building society.
There are a number of reasons you may want to consider getting a mortgage from a building society.
Five reasons to get a mortgage from a building society:
Good interest rates – Building Societies are offering some of the best interest rates on the market. If we look at two year fixed rate mortgages out of the five lowest rate deals currently available, four are offered by building societies. Chelsea Building Society is currently offering a 1.74% deal, Yorkshire Building Society a 1.94% deal and 1.99% deal and Norwich and Peterborough Building Society a 1.99% deal.
Customer Service – Building societies have a reputation for providing good customer service. Data from research organisation GfK NOP in summer last year found that building society customers were 22% more likely to think their provider valued them as a customer than bank customers. And building society customers were 17% more likely to think their provider acted in their best interests.
Flexibility – Building societies are more likely to lend to customers who look a bit risky than banks. In recent months a number of building societies have launched products aimed at first time buyers and people with small deposits. More than half of 95% mortgages on the market are provided by building societies. And one in five of their loans in 2012 were for 90% or more of a property’s value.
Offers for local people – Many building societies have products that are only available to local residents. For example the Cumberland Building Society only offers certain products, such as their 95% five year fixed mortgage, to customers who live near a branch. And, on products available to everyone, they will lend up to 15% more to customers who live within their branch operating area.
Different business model – Unlike banks, building societies are owned by their members and instead of paying shareholders, all profits are invested back into the business. Many building societies retain strong links to the regions they were founded in and contribute a lot to the local area – including sponsoring community projects.
Best mortgage for you
Whether a building society mortgage is the right deal for you will depend on your personal circumstances, but they’re certainly worth considering. An adviser will be able to talk you through what other mortgages are on the market which could best suit your needs.