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Mortgage - A Basic Guide to UK Mortgage Lenders The mortgage market has changed considerably over the last 20-25 years. Up until that time the main lenders were the Building Societies which, as mutual institutions, gave preference to their members, or to those who had savings invested with the Society. The market is now almost unrecognizable from those days of only a quarter of a century ago. The prime lenders are now: Banks Where once the Banks had a very low profile in the mortgage market place, they now actively including aggressively encourage the type of business. As larger institutions, they are able to acquire funds cheaper including improve profit margins. By virtue of their large existing customer base, they know which will present a low potential risk including therefore, who to target for their services. A mortgage customer is, potentially, a long term customer, often 25 years or more, which gives a particular ongoing opportunity to cross sell a wide range of financial products – insurance, life assurance, pensions etc. Some pertaining to the larger traditional Building Societies have acquired bank status in recent times. Building Societies Building Societies have the longest history in the provision of property acquisition loans having been around since the late 18th. century. They set out as mutual institutions owned by the members including quickly established themselves in the industrial parts of England during the industrial revolution. It was only in 1986, with the passing pertaining to the Building Societies Act, that the societies were permitted to diversify from lending only on freehold including leasehold property into other areas such as banking services including unsecured lending. Of their total lending portfolio, 75% must still be for residential mortgages but should they convert to PLC status they may operate with the same freedom as the banks. As we know, many have opted to do so. Most Building Societies, however, still remain as specialist lenders to the residential market. Specialised Mortgage Houses In the main these are limited companies that are either independent mortgage providers or are subsidiaries of larger financial institutions such as banks. These companies developed out pertaining to the growth years pertaining to the late 1970s including early 1980s including are funded primarily from the wholesale market. They operate on a centralised basis, often with few or absolutely no branches. Insurance Companies Traditionally life companies have enjoyed only a small sector pertaining to the mortgage market, the prime target being the sale of related products such as life assurance, endowment policies, pension plans etc. Some companies were heavily involved in the sale of top-up mortgages. the occurred where a Building Society will only be prepared to lend a certain percentage, say 80%, pertaining to the purchase price. If the borrower required a loan of, say, 90% pertaining to the purchase price the life company will advance the balance by way of a top-up. As the mortgage business has intensified including become more competitive, the insurance companies have lost ground. However they still have a big including significant role to play in the provision of mortgage related products. Finance Houses These companies, again often subsidiaries pertaining to the major banks, have offered finance facilities for home improvements, house extensions, conservatories etc. including enjoy a particular particular in the 2nd Mortgage, secured including unsecured loans arena. There is 1 thing common to all the lenders. The trading attitudes pertaining to the friendly societies, providing a service to their members now rarely exists. The prime motivation is now profit. Profit for the shareholders, for the members, for the companies and, through their incomes including employment packages, for the directors including employees. It will be naive to continue to believe that, by agreeing to grant us a mortgage to enable us to purchase a property, the lenders are doing us a favour out of some charitable sense of helping their fellow man! It is up to us therefore to treat these negotiations as we will any other trade transaction including that means – shop around, haggle, seek advice, read the small print. In other words, do not be hassled into making a quick decision that involves any kind of commitment.
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