Copy article

RAW - Building societies v banks - RAW

ended 16. August 2026

****NEWSPAGE RAW**** 

Newspage asked mortgage brokers how smaller building societies tend to add value relative to mainstream lenders, for example, by dealing with more complex cases that involve manual underwriting, or dealing with a specific type of borrower that perhaps high street lenders avoid (expats, contractors, etc)?

Unedited views from brokers, building society sector insiders and property experts below.

12 responses from the Newspage community

Copy all

Star Quote
Copy

Editor
Tim Bowen
CEO at Mutual Vision
There is a part of the UK mortgage market that only really works because small building societies still exist. These societies lend to contractors, self-builders, expats, older borrowers and people with complicated incomes, cases where the borrower may be perfectly creditworthy but doesn't fit neatly into a large bank's model. What's notable is that most consumers have never heard of many of these lenders. Brokers effectively provide the navigation layer, aware which society will actually understand a case and where there may be a path to yes. But we shouldn't take that ecosystem for granted. Many of the smallest societies are trying to compete with banks spending huge amounts on tech while carrying processes and systems built for another era. Modernising them isn't about turning them into little versions of big banks but making their model economically sustainable, lowering the cost of serving more complicated borrowers and making them as easy for a broker to deal with as big banks.
Copy

Editor
Aaron Strutt
Product and Communications Director at Trinity Financial
There is a whole different world of lenders out there away from the big banks. Smaller building societies offer an alternative to the main lenders because of their different risk appetite & flexible approach to underwriting. They often issue mortgages to borrowers when the big lenders will not.The big lenders can struggle when a borrower’s income, property or personal circumstances do not tick all the boxes. Smaller building societies are often more willing to use manual underwriting and consider the full story behind an application. They can be particularly useful for first-time buyers receiving family support, contractors, self-employed applicants, company directors, newly qualified professionals and those with credit issues. Building societies often charge higher rates and they do this to take slightly more risk but make a bigger profit. The issue is there are so many small building societies offering weird and wonderful mortgages, it is hard to keep up with all of the criteria.
Copy

Editor
Michelle Lawson
Director at Lawson Financial
Smaller lenders, traditionally Building Societies, can take a more understanding and pragmatic approach rather than the mainstream lenders that adopt the 'computer says no' approach for those that don't fit 'the mould'. With it being a more manual process, they have the ability to take a view and understand the grey that so many borrowers now fall into. This goes back to the original days when lending was based on a human decision and is more welcomed. These lenders are smaller regional societies and so many borrowers will not have heard of them but there are some great examples of flexible underwriting among them.
Copy

Editor
Stephen Perkins
Managing Director at Yellow Brick Mortgages
Smaller building societies often add value where a borrower’s circumstances do not fit neatly into an automated lending model. They may be more willing to look at the full story behind an application, whether that involves complex income, an unusual property, a contractor, an expat or someone whose case simply needs an experienced underwriter rather than a computer-generated decision.

That does not mean they lend recklessly. In many cases, they are applying sound judgement to borrowers who are perfectly creditworthy but do not fit the standard high-street template.

This is also an area where brokers can add significant value. Most borrowers will naturally approach a familiar bank, but they may never discover that a smaller society has criteria better suited to their circumstances. Sometimes the best lender is not the one with the biggest advertising budget, but the one prepared to understand the individual case.
Copy

Editor
Harvey Dhillon
Founder & CEO at Zmartly
I prepare the accounts and tax returns that mortgage lenders judge my self-employed clients on, and I see the same pattern every year. A contractor who leaves profit in their company. A sole trader with one strong year after a dip. An online seller with lumpy seasonal income. A big bank's automated scoring reads their tax return, sees a messy number and says no. A smaller building society that underwrites by hand can read the whole picture: retained profits, day rates, the trend across several years. The difference is often not the borrower's income. It is how the lender reads the paperwork. Most borrowers have never heard of these societies, which is why a broker who knows them earns their fee. My job is the evidence: finalised accounts, an SA302 from HMRC, and not chasing every deduction so hard that the income you declare cannot support the mortgage you want. The self-employed are not riskier borrowers. They are just harder to read at speed.

Copy

Editor
Ross Lacey
Director & Independent Financial Adviser at Fairview Financial Management
Smaller building societies can offer a more bespoke approach to underwriting given they see less volumes of business than more mainstream, high Street lenders.

They know that part of driving business is being able to deal with cases that more mainstream lenders can't. That also means they can price their rates higher too.
Copy

Editor
Jamie Elvin
Director at Strive Mortgages
Smaller building societies continue to prove their worth by looking beyond automated credit scoring and understanding the person behind the application. They’re often able to help self-employed borrowers, contractors, professionals with complex income, older borrowers and clients with unusual properties where a high street bank may simply decline. This is where a knowledgeable mortgage broker adds real value. Many of these lenders aren’t household names and each has its own niche criteria, so matching the right client to the right lender can mean the difference between an unnecessary decline and a successful mortgage offer. In an increasingly automated market, manual underwriting remains one of the building societies’ greatest strengths.
Copy

Editor
Nouran Moustafa
Practice Principal & IFA at Roxton Wealth
Smaller building societies are often where common sense lending still exists. Their greatest strength is manual underwriting: a human reads the story rather than an algorithm rejecting a borrower because they are self employed, an expat, a contractor, approaching retirement or have a small historic parking related CCJ. Without that flexibility, perfectly responsible borrowers are shut out of homeownership for failing a tick-box test. This is exactly where brokers earn their fee, because many clients will never have heard of these lenders and their criteria can be highly nuanced. I regularly look to societies such as Mansfield for historic credit issues and complex income, Market Harborough for expats and unusual cases, Saffron for contractors and self-employed borrowers, and Vernon for JBSP and later-life cases. They may not always have the cheapest headline rate, but sometimes they are the only lender willing to understand the person behind the application.
Copy

Editor
Tracey Dixon
Buy-to-Let Mortgage Specialist & Owner at Pure Mortgage and Protection
Smaller building societies can be invaluable when a good mortgage case doesn’t fit neatly into a high street lender’s criteria.
Their strength is often manual underwriting. Rather than a case being declined because one element falls outside an automated scorecard, an underwriter can look at the circumstances and the evidence behind them. This can be particularly useful for self-employed borrowers, those with multiple income sources or more complex circumstances.
It’s also where brokers can really add value. Borrowers naturally gravitate towards familiar high street names, but sometimes a smaller lender they’ve never heard of is much better suited to their circumstances.
The best lender isn’t always the biggest name or the cheapest headline rate – it’s the lender that understands the case in front of them.
Copy

Editor
Hannah Vandervennin
Director - Mortgage Adviser at The Mortgage Consultancy
Everyone assumes building societies are for complicated cases. Mostly they're not. They're for the client who sits slightly outside mainstream lending, and that's a much narrower job than it sounds.

There are 43 of them and each one does a small number of things properly. Suffolk Building Society will let a borrower repay half the original loan during their fixed rate with no early repayment charge, which is the fee you'd normally pay for overpaying. Family Building Society is genuinely good on later life lending and does offsets on buy to let, where a client's savings sit against the mortgage and cut the interest charged.

I'll happily tell a client to pay slightly more for a feature like that. A rate lasts two years. Flexibility can change what they're able to do for the next ten.

Manual underwriting is the reason they can say yes and the reason you wait. As the tech catches up I think building societies become the obvious home for borrowers sitting between the high street and the
Copy

Editor
Matt Coulson
Founder at Heron Financial Ltd
Smaller building societies earn their place the moment a case stops being straightforward. The big banks lend by algorithm, which is fast and fine if you're salaried with a clean profile. Step outside that box, though, and the automated "computer says no" kicks in. That's where a good regional society comes into its own, because they still underwrite by hand. A real person weighs the whole picture and makes a judgement, rather than a system scoring one number. So they'll often lend to the self-employed with lumpy income, contractors, expats, older borrowers, or a home of non-standard construction, exactly the cases the high street turns away. The catch is most people have never heard of these lenders, and you can't walk into one on the high street. That's where a broker adds value: knowing which of them will say yes to a given set of circumstances, and how to present the case. Some of the best outcomes I've had for clients came from a society most people couldn't name.
Copy

Matthew Fleming-Duffy
Founder at Harbour Home Finance Ltd
I've had countless positive outcomes with smaller building societies such as Marsden, Suffolk, Family, Dudley and Newbury. Their strength isn't necessarily offering the cheapest rates, but their willingness to look beyond a computer-driven application process. Many use experienced underwriters who assess the whole case rather than simply applying rigid criteria. That makes them invaluable for expats, the self-employed, borrowers with unusual income or those seeking mortgages later in life. This is where brokers add real value. Most consumers have never heard of these lenders, yet they can often find solutions where mainstream banks and building societies decline a case. Being able to discuss a case with an underwriter before submission also helps avoid unnecessary declines and gives everyone greater confidence before proceeding.