Finding a mortgage in the 21st century is paradoxically both simple and increasingly complex. Although the uptake of internet banking has meant that anyone can, in theory, find the very best deals without having to leave the comfort of their own home, the huge amount of choice available can in fact be almost overwhelming. Being able to choose between many different products lets consumers identify the best mortgage for them, but in reality, with hundreds of mortgages available, the most valuable trait most consumers look for in their mortgage provider is reliability, trustworthiness and honesty. Knowing that your mortgage provider can be counted on not to squeeze you for every penny you’ve got is worth a great deal when it comes to choosing the lender who’ll finance the largest purchase you’ll ever make, and Nationwide Building Society is one of the few financial organisations in the UK with a reputation for putting their customers first.
Since the founding of the companies that would go on to become Nationwide, financial organisations throughout the country have worked tirelessly to keep ahead of the game, with every bank vying for position against their competitors to secure a greater share of the market. In many cases, this has led to them taking risks with both their own and customer’s money, and few banks have reached a successful position without incurring a few scandals along the way. Nationwide, however, have managed to become the world’s largest building society whilst continuing to uphold the values they established right from the very beginning.
Nationwide are, as the name suggests, found all over the UK. In fact, a comparison of Nationwide’s market share with that of their competitors starkly demonstrates just how ubiquitous they are: their nearest competitors, Coventry Building Society and Yorkshire Building Society each hold around £35 billion – a serious amount of money, in anyone’s book. Nationwide, however, have holdings totalling £308 billion, completely eclipsing the competition. In fact, Nationwide’s holdings are equal to two thirds of the entire building society market share; the combined holdings of every one of the UK’s 44 other building societies do not even come close to their total. This puts into perspective just how successful Nationwide have been, and though the business may have evolved and developed over the 150 years since its foundation it’s still the consumer’s number one choice.
Building societies function in a very similar way to banks in the modern day, but during the golden age of building societies they were very different beasts indeed. Building societies were created to allow local investors to fund their community by contributing to a “pool” of finance which local residents could apply for funding from. Loans from this pool were used to finance construction of property, mostly housing for local families, and the lenders would receive a percentage of interest in return for their loan. This had several key advantages for both lenders and borrowers: firstly, it was a reliable way for local businessmen to finance the growth of their own community, instead of pumping their money into faceless corporate schemes. The local nature of building societies allowed communities to develop themselves without recourse to outside funding, and fostered a sense of local identity.
However, any investment needs to generate an incentive, or it will struggle to attract funding. In this case, the key advantage which building societies possess is their lack of shareholders to satisfy. A regular private bank raises funds by selling off shares to investors, who then receive compensation in the form of dividend payments. The bank therefore has to produce a large enough profit to pay its shareholders as well as providing operating funds and investment capital; because of this additional expense, banks need to charge higher interest rates to their borrowers and offer lower returns to their creditors. However, because a building society has no such incentive to squeeze their profit margins, they can offer much more attractive deals to both lenders and borrowers alike; they’re funded directly by the investment of their creditors, and so they’re motivated to provide the best service possible, rather than the most profit possible.
This system of co-operation benefits all parties, and the mutually beneficial nature of the relationship between lenders and the building society has led to such organisations being termed “mutuals”. Because this system worked so well, soon after the creation of the concept in the late 18th century, nearly every town had at least one local building society. Some, like Halifax, had several large societies in competition with one another – the mid-19th century was the golden age of the building society, and there were thousands of organisations throughout the country. The existence of many very small societies provided many opportunities for expansion for larger organisations, and Nationwide’s precursor society, the “Northampton Town and County Freehold Land Society”, was eventually involved in over a thousand mergers to become the giant that it is today.
In the 1980s, Government deregulation allowed for building societies to shed their mutually co-operative relationships and float on the stock exchange; they could, effectively, convert into regular high street banks. Abbey National was the first building society to take advantage of this at the end of the decade, and many other longstanding building societies soon followed suit. This was due in part to the democratic nature of the organisations; anyone who had deposited a sum of more than £100 was typically entitled to a vote on whether the building society should “demutualise”, or whether it should remain co-operative. Demutualisation often brought with it a financial incentive, and many members were swayed by the offer of an instant payout in excess of a thousand pounds. Of course the opportunity to make a quick profit also drew the attention of opportunistic “carpetbaggers”, who would deposit the minimum required amount to become a member, vote for demutualisation and then collect the payout
The wave of demutualisation which swept the UK throughout the 1990s left very few building societies standing; from hundreds of organisations at the time of deregulation, there were soon fewer than fifty. In fact, many of the remaining societies are very small by the standards of modern banking, and there are only 15 building societies remaining with more than £1 billion in assets (as of July 2016). Nationwide is the largest building society remaining by a huge margin, and is in many ways the prime representative of co-operative banking in the UK. Having resisted several attempts at demutualisation, and defeated multiple votes (some by only a small margin), Nationwide continues to offer products which stay true to its vision of fairness and co-operation.
Taking out a mortgage with the world’s largest building society might sound like it would make you a very small fish in a very large pond – you’d be the smallest of small fry, and though your mortgage would be hugely important to you it wouldn’t constitute a blip on Nationwide’s balance sheet. This is far from the case, however, as Nationwide are sure to offer all of their customers a fair, balanced mortgage which suits their individual circumstances. There are, in fact, dozens of different types of mortgage available from Nationwide, allowing borrowers of all kinds to take out loans with the nation’s largest building society. Regardless of the size of your mortgage, Nationwide offer a product which will suit your situation perfectly.
Buying a home for the first time is a daunting experience, one which leaves many homeowners struggling to work out exactly where to start and where the best deals are to be found. Picking the right deal is tough at this stage, because your options are very limited; still, the stakes are high, as being tempted into purchasing an inappropriate mortgage on your first home can leave you saddled for a long time with high monthly payments or restrictive terms and conditions. The choices available with a Nationwide mortgage, though, leaves you some flexibility on how you approach your first purchase, and allows you to make some key decisions to influence your future.
Nationwide offers their low deposit mortgages to buyers who have proven themselves to be reliable savers; buyers who have held a Nationwide savings account for three months or longer are eligible to apply for these mortgages which offer competitive interest rates without requiring a hefty deposit. Although a 5% deposit on any house is still a significant figure to achieve, the majority of buyers will find that this brings a home of their own within reach, instead of holding it unattainably far away.
Nationwide are one of the mortgage providers participating in the UK Government’s Help to Buy Equity Loan scheme, which allows first time buyers to obtain their deposit from the Government. Typically this scheme requires the borrower to provide a portion of the deposit themselves, but allows them to grow their 5% deposit into a much larger one in order to obtain a better deal on their mortgage’s interest rate.
Putting down a deposit on a property requires a significant investment of capital, something which many first time buyers find to be prohibitively expensive. This restricts many buyers to small deposits, making it hard for them to obtain a decent interest rate on their mortgage. However, the shared ownership scheme provides an alternative method, wherein a buyer will only purchase a share of a property – between 25% and 75% of its value. The housing association from which they’re purchasing the property will retain ownership of the remaining percentage of their home, and will charge them rent on it. This has the advantage of allowing the buyer to contribute a much larger portion of their home’s purchase price themselves, securing a better mortgage deal in the process. However, it does mean that they’ll continue to pay rent unless they decide to buy the remaining share of the property from the housing association.
In addition to the various Help to Buy schemes available through Nationwide, there are a variety of standard mortgages available to first time buyers. In fact, mortgages of nearly every conceivable combination are available, with fixed rate and tracker mortgages offered in different lengths, with different fee structures and with the ability to claim cashback. As highlighted at the top of this page, too much choice is almost as bad as no choice at all; however, Nationwide make it very easy to compare the products which suit you, and their mortgage pages feature a powerful search and comparison function which makes it easy to select options that work for you.
If you’ve been through the mortgage application process before, you know that the first one is the hardest. However, when you’re moving home there is a great deal of additional stress on your shoulders; you’re likely stuck in a housing chain, and need to know that the mortgage you’ve been offered is not only right for you, but one you can rely on. Nationwide have a long history as a reliable and trustworthy provider of finance, and as such allow harassed homeowners to worry about one fewer problem. Choosing the mortgage that suits you is streamlined and easy, as Nationwide offer the same services to you as they do to first time buyers. It’s simple to sift through the different deals available by simply entering in your requirements, and you can tell with a glance what your monthly payments will be. Since homeowners are likely able to contribute a larger portion of the property value as a deposit, the deals on offer are typically cheaper, more flexible and can be tailored to suit your needs more easily. If you already hold a current account with Nationwide, you’re eligible to receive £250 of cashback upon completion of your mortgage deal – completely free, with no strings attached. Although the sums involved in a mortgage dwarf this cashback offer, it can still make a reasonable dent in the fees involved or take the strain off when you’re moving home.
Consumer choice is one of the most important parts of the modern market, and the UK Government is looking to encourage competition by making it easier than ever for customers to switch their service providers. Currently, mortgages take between four and eight weeks to switch (though some can take as many as twelve), and often involve hefty legal fees. However, the near future is likely to see mortgage providers making a marked shift towards faster switch times; though the prospect of a “7-day switch” for mortgages seems far off, mortgage providers are making changes to streamline this process.
Nationwide have taken steps to make the process of switching to them as painless as possible; not only is it easy to find out whether you could save with them or not, they also offer to cover the standard legal costs associated with the transfer of your mortgage. This could save a substantial amount, allowing consumers to pick and choose the best mortgage provider at any time.
Actually applying for a mortgage from Nationwide is more straightforward than many online guides would have you believe. Far from the gruelling “ordeal by paperwork” you might be led to expect, the process of applying for a loan can in fact be done almost entirely online from the comfort of your own home, and if you’d rather have the assistance of an expert you can always visit a Nationwide branch or call their service centres.
When applying for a loan, it’s important to recognise the three stages of application:
Nationwide, like many other mortgage providers, provides a tool for consumers to check the availability of suitable mortgages from the range they offer. Nationwide’s Mortgage Calculators allow borrowers to check which deals they can apply for without having to sift through long pages of near-identical offerings.
This is the next step in the process, actually submitting personal information to check whether you’re likely to be approved for you chosen mortgage or not. An approval in principle is not a mortgage offer, and shouldn’t be treated as such; it’s simply an opportunity for Nationwide to indicate whether it’s worth proceeding with your application or not.
If you decide to go ahead with your application, you’ll need to submit detailed personal information to the mortgage provider. The process of application and approval can take upwards of a week, but once a mortgage offer has been made you’re able to start looking at potential new homes.
As the largest, most venerated building society in the UK, Nationwide have a respected position as one of the few remaining financial organisations who are explicitly and intrinsically invested in the welfare of their customers. Their continuing ability to demonstrate excellence in customer service as well as providing top-notch financial products will go a long way towards ensuring that they remain at the top of the financial sector for years to come.