Building societies are ‘mutuals’ – they’re like banks, but they’re owned by their members, not external shareholders. For this reason, their rates are often very competitive. They are democratic, ethical institutions, with an emphasis on providing local branches.
The mutual sector is healthy and growing. Around 20 million people have building society accounts, building societies have helped over 3 million people to buy a home, and they currently provide one in every three mortgages in the UK.
What to do
Find a building society
If you go to the website of the Building Societies Association, the trade body for building societies, you’ll find a list of all the building societies in the UK, with contact details. You’ll be able to choose one in or close to your town if you want to support your local society.
A word of warning: many building societies were ‘demutualised’, starting in the 1980s, after deregulation that allowed mutual societies to become banks with shareholders, or to be merged with existing banks. Incentives were offered to members in the form of cash payments or shares. The first mutual society to be demutualised was Abbey National, followed by famous names such as Alliance and Leicester, Northern Rock and Bradford and Bingley. They have all since failed (and the Co-operative Bank is no longer a co-op). To be sure that you’re joining a real mutual society, check the list on the BSA’s website (above).
Mortgages and savings
All building societies provide mortgages and savings. Just pop into your local branch or call them, and they’ll explain what to do / how to switch.
Lots of people organise their mortgages through a broker, and if that’s the case, you can stipulate that you’d like to use a building society. If they don’t understand your reasons for doing so, you’ll then have the opportunity to educate them.
Current accounts are expensive for financial institutions to operate, but for current accounts, you have two options – the Nationwide, or if you live in Cumbria, the Cumberland. They’ll be able to switch all your standing orders and direct debits painlessly too. You could possibly have a Nationwide current account as well as savings / mortgage with your local society.