First-time buyers, home movers, and BTL property owners often question the difference between high street banks and building societies. Not only that, but there are also specialist mortgage providers to consider too. This article will help you to understand the differences between providers of mortgages in the UK.
Introduction to banks
The biggest participants in forex markets are the banks and central banks such as the Bank of England (BoE). Financial intermediation can be viewed as “the middleman” in that it matches a depositor’s needs with a borrower’s requirements.
How do the banks finance themselves?
Banks lend to other banks on the money markets. The interest rate charged is based on LIBOR – the London InterBank Offered Rate. LIBOR is administered by the Intercontinental Exchange (ICE), which calculates and publishes the rate each day.
LIBOR is the average of the interest rates that would be charged by central banks to other banks for short-term loans. Rates charged are dependent on the market’s view of future interest rates. If there is a belief that interest rates are likely to rise, then the LIBOR rate will be above the BoE base rate. Conversely, if rates are expected to fall, then rates will be below the BoE base rate.
Check AffordabilityWhat are building societies?
Building societies are owned by their members, who may be savers or mortgage customers. At least 75% of their lending must be in the form of secured loans on residential properties. Unlike a limited company, none of the profits are reserved for shareholders. Important matters are discussed at the annual general meeting (AGM), and decisions are made on the basis of one member, one vote.
How do building societies finance themselves?
Building societies take deposits from savers and lend money to people seeking mortgages. Interest is paid on the former and charged on the latter.
When raising money on the international money markets, building societies are restricted to borrowing no more than 50% of their total funding.
Specialist mortgage providers
Specialist mortgage providers operate in the commercial property market. They help borrowers with limited company SPV BTL mortgages, commercial mortgages, and other types of unsecured loans. This market sector is currently on the rise due to increasing demand for limited company BTL properties.
Drawbacks of specialist mortgage providers
It is critical to highlight that there are certain drawbacks of specialist mortgage providers. Therefore, a borrower should consider overall cost vs. benefit before selecting a suitable mortgage provider. Generally speaking, compared with high street banks, a specialist mortgage provider will:
The FCA does not regulate commercial mortgages.
Compare mortgage quotesWho are the niche mortgage providers in the UK?
There are niche mortgage markets that provide mortgage facilities to different types of customers. For example, British expats can apply for mortgages with specialist lenders. Foreign nationals can also invest in UK properties via mortgage intermediaries and specialist lenders.
If you need help getting a mortgage you can always contact us on 020 3011 1986 or www.wismortgages.co.uk/contactus/
As a mortgage is secured against your home or property, it could be repossessed if you do not keep up the mortgage repayments.
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