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Building Societies are mutual organisation's, owned by their members and not by their shareholders, whereby the members invest their savings with the Building Society or borrow money from it, mainly for house purchase.
Here we take an historical look at Building Societies and how they work, a look at their drawbacks as far as borrowing is concerned, and provide help as to how we might be able to help where a Building Society may not be able to.
Table of Contents:
So, as previously discussed in the introduction, a Building Society is a mutual organisation (i.e. one that is owned by its members and not by its shareholders). A building society's members are those that invest their savings with the society, and those who borrow money from it, usually for house purchase. As building societies do not pay dividends to shareholders, they are able to pass these savings on to their members.
Building Societies became popular in Britain in the 19th century, as a working class co-operative savings group, and by pooling savings, their members were able to buy or build their own homes.
The Building Society movement grew and flourished until the latter quartile of the 20th century, when the Financial Service Act 1986 provided opportunities for greater competition within the UK's financial services sector.
The event was known as the "big bang", and building societies were granted permission to lend money, not only for home purchase and home improvements, but for any purpose! Indeed, in the activity that followed the "big bang", many of the larger societies successfully entered into the banking arena. To accomplish this, they shed their mutual status, and floated their activities on the stock market. Halifax Building Society was one of the first societies to demutualise.
The traditional building societies still remain, and although their main business is to offer savings accounts and mortgages, most have diversified and also provide a much wider range of personal financial services. The ethos of the building society being owned by, and run by its members very firmly remains. As a result, the societies are able to operate on a lower cost basis, and thus can usually offer cheaper mortgages, and higher interest rates than most of their competitors.
One of the drawbacks of using a building society for mortgage funding purposes is that there is a large degree of intransigence when it comes to underwriting criteria.
Building Societies will not generally consider applications from borrowers who have encountered a difficult or unusual credit history. Most are reluctant to accept borrowers who have county court judgements or credit defaults registered against them, or who have had a history of arrears with their present mortgage provider.
Similarly, the Building Society rules are generally very strict with self employed borrowers, and will generally require an average of their last three years Net Profit, taken from the borrower's audited accounts, to be sufficient to support the mortgage borrowings on a 3x or 3.5x basis.
The answer is undoubtedly yes!
Shire Direct has developed a portfolio of lenders whose aim is to help fund mortgage propositions - even in the trickiest of circumstances! Thus our aim is to provide unique mortgage solutions for individuals - whatever their circumstances!
Just check out the following:
Shire Direct will consider standard income multipliers up to 5.9x joint salary, or up to 7x based on a Gross Debt to Income Ratio.
Self certification of income for self employed borrowers will be considered, even on a start-up basis. Simply give one of our Advisors a call to see how these schemes work.
Despite the existence of an adverse credit history, Shire Direct can usually come up with a solution. However, the greater the extent of adverse credit, the loan to value is gradually reduced!
Here at Shire Direct, we have lenders in our panels that will even consider mortgage funding from day one of discharge of your bankruptcy.
Borrowing during bankruptcy is understandably very restricted. however, it may be possible to remortgage during bankruptcy if the purpose of use is to clear your indebtedness!
Homeowners who have previously entered into an Individual Voluntary Arrangement (IVA) , will know that in the final year, they must raise sufficient money to discharge the balance of their IVA from equity that remains in their property. Although, most traditional high street lenders will not consider these propositions, Shire Direct have several lenders who will consider refinancing customers mortgage borrowing in order to raise the required funds.
Also within our portfolio of lenders, we have facilities to accommodate day 1 full and final settlements of an IVA. Instead of entering into a five-year IVA programme of repayment, it may be possible to offer your creditors a percentage of your total indebtedness in full and final settlement, without further liability. If you would like to explore this option further, please do not hesitate to contact one of our advisors.
Hopefully we've managed to answer any initial questions you may have had about Building Societies, and how we might be able to help where a Building Society can't. If you are thinking of applying for a mortgage or remortgage, and require any information or assistance, we would of course love to hear from you! You can speak to a qualified Mortgage Advisor up until 10.00pm everyday, including weekends by calling us on Freephone 08000 282 281, or why not enquire online, anytime!
The overall cost for comparison is 9.8% APR.
The actual rate available will depend upon your circumstances. Ask for a personalised illustration. APR variable and based on a usual case. Most customers are likely to receive a lower rate or the same rate as our overall cost for comparison rate - learn more about APR.
There are no upfront broker fees.
However, a fee may be charged on successful completion. An indication is that on conforming cases (straightforward applications with no or minimal adverse credit) a fee may be charged of up to 1% of the amount advanced, typically £795 and will depend on your circumstances.
For non-conforming cases (where case research and processing may be more complex due to adverse credit or unusual circumstances), a fee may be charged of up to 3% of the amount advanced, typically £1,995.
THINK CAREFULLY BEFORE
SECURING OTHER DEBTS AGAINST YOUR HOME.
YOUR HOME MAY BE REPOSSESSED
IF YOU DO NOT KEEP UP REPAYMENTS ON A MORTGAGE OR ANY OTHER DEBT SECURED ON IT.
Adding existing debt to your mortgage will increase the repayment term and overall cost.
Are you worried and becoming stressed because you are having problems getting a mortgage or remortgage? Worry and stress no more! Here at Shire Direct we provide tailor made mortgage solutions to suit you, and can usually help with all kinds of circumstances including...
Remember, we're here to help, and would love to hear from you!
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Claim £100 worth of Argos Vouchers upon completion of your transaction throughout 2008. Terms and conditions apply - see our Vouchers Special Offer page for full details.
Shire Direct and Shire Direct Mortgages are trading styles of Shire Processing Centre Limited which is
Authorised and regulated by the Financial Services Authority in respect of regulated mortgage products and general insurances.
Registered No: 302389. Commercial funding and Secured Loans are not regulated by the FSA.
Licensed Credit Brokers. Consumer Credit Licence Number: 349999.
Shire Processing Centre Limited is registered under the provisions of the Data Protection Act by the Information Commissioners Office: Registration No: Z6795249. Registered in England & Wales. Company number: 2732202. Telephone calls may be recorded for training, monitoring and security purposes. All applicants must be aged 18-years or over.
