Building societies help to support new build mortgages 

If you’re looking for a non-traditional mortgage, a building society is often a good place to start. Many smaller lenders offer specialist products and their ability to innovate has seen them grow their market share in the UK.

What is a building society?

New data has revealed that mutuals now approve one in three mortgages in the UK, with self-build becoming one of their growth areas. New figures from the Building Societies Association (BSA) show that mutual approved one in three new mortgages across the UK in the first three months of 2017.

Association members approved 112,287 new mortgages in the first quarter of 2017, up 2% on the same period the year before. There were 359,159 new mortgages approvals across the market, giving building societies a market share of 31%.

BSA chief executive Robin Fieth says: “Despite the challenges facing the housing market, building societies have maintained a high market share of mortgage lending. Buying a home is not always a straightforward process and each borrower has different needs and faces different circumstances. Building societies are able to take a more personalised approach to lending, responding to factors including changing age demographics and working patterns.”

One of the areas that building societies are increasingly active in is self-build.

Building society launches innovative family assist self-build mortgage

A leading regional building society has launched a new product aimed at helping homebuyers to build their new home.

The Melton has added a family assist self-build mortgage to its range of self-build products, allowing parents to provide the deposit for a self-build project. The deposit will then be returned as a final stage payment on completion of the build.

The new product provides staged payments in arrears and is available to purchase the land as well as pay for the cost of the build. They will lend up to 75% of the total costs with a maximum loan size of £250,000.

Nicola Alvarez, director of sales and marketing at the Melton, says: “Self-build and renovation offers choice and diversity to the home buyer and is often beyond the reach of first-time buyers where providing a substantial deposit can be a barrier.”

The Leeds widens the choice of new-build warranties it accepts

If you’re buying a new home then another leading mutual has made a move to support you. Following feedback from small developers, Leeds Building Society will now accept a range of warranties on new homes in addition to a National House Building Council (NHBC) warranty.

Leeds Building Society head of intermediary distribution Martese Carton says: “There’s a widely-shared view that increasing housing supply is an absolute priority for the UK, although opinions differ as to how this can be achieved.

“We’re doing what we can as a lender to support developers by strengthening our new build proposition, such as broadening the range of warranties we accept on new build properties.”

The mutual has also improved its new build criteria by increasing the loan-to-value available on new homes to 90% on houses and 85% on flats.

Leeds has also created a dedicated new build underwriting team and has brought in specific criteria to support modern methods of construction.