How does a building society work?

A mutual building society, such as The Nottingham, is a financial institution run for the benefit of its members, primarily offering saving and mortgage services. 

We’re different to a bank. We don’t have shareholders so don’t have to pay them bonuses out of the profits. This means our profits and extra benefits can be reinvested in the business and passed on to customers through things like lower mortgages and higher savings rates.

Historically, building societies were set up to help people in the local community club together to become homeowners – and give a safe and secure place for their savings. In the early days, members would pool their money and each buy land and build a house by borrowing from these funds. Then when everyone had built a house, the institution would close, having fulfilled its purpose. But this all changed in the 1840s with permanent building societies which continued trading to help new customers.

Today, a mortgage allows someone to borrow funds for house-buying or building, with the mortgage being secured against the property itself – which means the house can be re-possessed by the lender if the borrower defaults on their repayments.

At The Nottingham, we’ve been successfully looking after our customers’ money since 1849. 

Led by Samuel Fox, a leading Quaker and local grocer, the founders of The Nottingham Building Society made the decision to take a prudent approach to their customers’ finances. They invested money wisely with an eye to safe and secure growth rather than high-risk ventures. And by staying mutual, all profits could be ploughed back into the society for the benefit of everyone.


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