Building Societies: Offering attractive interest rates on savings and cheaper mortgages

The origin of Building societies:

Building societies are financial institutions that specialize in the provision of banking services such as savings accounts and other related services, particularly mortgage lending. The first institutions were established when several people came together in order to co-operate towards the construction of their own houses. A completed house was allocated through lottery to a member. Regular contributions were made to the society until each member became the successful owner of a house.  With time, these institutions began borrowing money from investors to facilitate the construction of houses more quickly. About a hundred years ago, the majority of building societies in UK shifted their focus from the building of houses to the provision of capital for the construction of houses.

The legal provisions governing Building societies:

The British banking laws in the 1980s were changed to permit building societies to provide banking services similar to normal banks. In 1986, another Act was passed with the objective of allowing building societies to compete with banks effectively. There were about 59 building societies in UK with an estimated total asset base exceeding £360 billion, by the beginning of 2008. Nevertheless, financial challenges during the period 2007- 2010 saw several mergers, which resulted in the number coming down to 47. Building societies in UK compete actively with banks, particularly for deposits and mortgage lending.

Building societies are mutual institutions owned by its members (savers and borrowers) to benefit the members. Consequently, the majority of persons with savings accounts or mortgage in these institutions are members with specified rights including voting, receiving information, attending and speaking at meetings.

Building Societies

Differences between banks and building societies:

The main difference between a bank and building societies is ownership. Banks are companies owned by shareholders, which make maximization of shareholders wealth the main objective of the bank. On the other hand, building societies are not under pressure to maximize the wealth of external shareholders. This goes a long way in enabling them to operate on lower costs besides offering more attractive interest rates on savings and cheaper mortgages.

The Building Societies Association (BSA):

Building societies associations’ key role is to represent members’ interest to external bodies including government, regulators and departments. Becoming a member of the BSA offers numerous benefits including recognition, networking and knowledge. The BSA of UK includes a savings bank, mutual insurance companies, representatives of cooperative sector, firms of solicitors, audit & accounting firms and suppliers of business services to the BSA members.

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Building Societies Actually Provide Superior Facilities To House Owners

Owning a personal house is everybody’ dream but it may not be possible for everyone to purchase a dream house due to financial constraints. Therefore, in order to tackle monetary issues several building societies have emerged to help numerous potential home buyers who may be facing financial difficulties in buying a dream house. However, it should be kept in mind that these building societies in UK only operate in United Kingdom. These bank and building societies are actually monetary institutions that are jointly owned by registered members. Nevertheless, it was really in the 19th century that these financial societies came into existence with diverse business owners providing mortgage assistance particularly for individuals wanting to purchase houses.

These extremely advantageous and effective building societies associations have gained enormous popularity with the general public in UK as they tend to provide several useful products and services that are also rendered by banks. However, the general products and services that are usually provided by these building societies comprise mortgage lending, saving accounts to several individual banking needs and even services. It has been observed that several individuals don’t have a liking to deal with a particular bank as they provide an extremely competitive monetary edge to building societies in UK. 

It must be kept in mind that there are several building societies associations in United Kingdom that are genuine agent of common lenders and depositors. The major function of these building societies is to properly characterize the mutual interests of its registered members to diverse peripheral bodies involving the government departments and even financial regulators. These building societies in UK have to follow certain norms and regulations made by the government. These societies in United Kingdom are actually administered by Monetary Services Authority. The societies have to work accordingly to legislature obligations under the Societies Law that was passed in the year 1986. In order to operate in the most effective manner these building societies have to be the part of Societies Association that provides them a very good base in the mortgage and savings market. You just have to search a very good building association in your area and then you can easily purchase your dream home instantly without an6y hassles.

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Building Societies- catering to varied needs

A house is the answer to everyone’s shelter and security needs. It is one place which not one but all would associate it as a place which offers them a solace place where they feel safe and secure. But with soaring prices owning a house has not remained everyone’s cup of coffee, as it is a big investment. Though there are Bank And Building Societies which would help many in making their dream come true by offering them a facility of part to systematic payments. But with the involvement of various formalities which require an individual to tender various forms, documents coupled with varied and increasing interest rates which are why many feel petrified for taking such loans to meet their housing needs.

In order to cater to such increasing housing needs that Building Societies have come to offer offering the same facilities as banks do with a difference. These societies offer facilities such as mortgage lending, deposit accounts and various personal banking services.The concept of building societies is a famous entity all across the United Kingdom. The first building society came to exist in the city of Birmingham in the Britain’s Midlands in the late 1700s.

The dictionarymeaning of building societies states that building societies refer to financial institutions which are mutually owned by its members. The popularity of these societies have gained and grown with time which is why building societies UK have found and made a place for themselves in various Australian, Jamaica, New Zealand and Ireland countries.

It is with the help of various services offered by these societies that many are able to earn and make themselves a house of their dreams. As off 2008, there existed fifty-nine building societiesacross the United Kingdom which as per statistics accumulated funds which amounted to over £360 billion.

There are various prominent names which feature in the minds of many as famous and well known building societies such as Hinckley & Rugby Building Society, Leek United Building Society and many alike which have made a place for themselves in the hearts of many based on  the services offered by them all.

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