Where mortgages may come from a bank just as easily as a building society, there is some confusion as to the differences between these institutions.

SUMMARY OF DIFFERENCES BETWEEN BANKS and BUILDING SOCIETIES

Banks are normally companies listed on the stock market and are therefore owned by, and run for, their shareholders.

As a result of not having to pay dividends to shareholders, building societies claim that they have historically offered higher rates of interest to savers and cheaper mortgages.

Building societies were set up as mutual institutions, which means that those with accounts become members and have certain rights to vote on issues affecting the society. Each member has one vote regardless of the amount they have saved or borrowed.

Traditionally they would only lend within their catchment area, but local societies have become more flexible to appeal to those who wish to save or borrow from them.

When it comes to choosing a building society there is no need to just look at those in your area, many will lend or accept deposits from those outside and also offer such services as postal, telephone and internet accounts.

The following is a selection of United Kingdom Building Society websites to assist borrowers: 

Lambeth Building Society  - Offering mortgages, insurance and a range of savings accounts to UK residents through branch offices and through the post.

Leeds & Holbeck Building Society  - Savings, investments, mortgages and other financial services.

Market Harborough Building Society - A traditional building society established in 1870.

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National Counties Building Society  - Comprehensive range of financial services to individuals based in the UK.

Nationwide Building Society  - Full range of services including online banking.

Newcastle Building Society  -  North East based society offering mortgage, savings and insurance products.

Norwich & Peterborough Building Society - Personal and business financial services.

Nottingham Building Society  - Building society offering mortgage and savings products.

This material and any views expressed herein are provided for information purposes only and should not be construed in any way as an endorsement or inducement to invest in any specific program. Before investing in any program, you must obtain, read and examine thoroughly its disclosure document or offering memorandum.

MONEY FINDER

WHEN THE SYSTEM MERGED

There has been monumental change in the market over the past decade and now, as far as savers are concerned, there is very little practical difference between banks and building societies.

Many building societies have thrown off their mutual status, offering their members shares or a lump sum bonus in return.  The process of building societies morphing into banks is called de-mutualisation.

Some groups of building society savers have been trying to get these traditional institutions to turn into banks in the hope of securing a windfall.  Some commentators have suggested that the days of building societies are numbered and that they will all have de-mutualised within a few years.

Competition means that banks now offer deals that can equal or beat what is on offer from building societies. Likewise, traditionally banks would offer current accounts, but these days most building societies offer them as well.

Many savings accounts can be opened through organisations such as retailers and large supermarkets as well, though in fact these are usually offered in partnership with a bank or building society.  However, building societies such as the Nationwide are holding their own on the High Street, suggesting that the days of the mutual are not numbered.