Building societies - SS2 Commerce Lesson Note

Building societies are financial institutions that operate on a mutual basis, meaning they are owned by their members rather than shareholders. They were traditionally established to help individuals save money and obtain mortgage loans to purchase or build homes. Building societies aim to serve the financial needs of their members, particularly in relation to housing and homeownership.

Functions of Building Societies:

Mortgage Lending: One of the primary functions of building societies is to provide mortgage loans to their members. They offer a variety of mortgage products, such as fixed-rate mortgages, variable-rate mortgages, and buy-to-let mortgages, to assist individuals and families in buying homes or investing in properties.

Savings Accounts: Building societies also offer savings accounts to their members. These accounts provide a safe place for individuals to deposit their money and earn interest on their savings. Building societies typically offer a range of savings options, including regular savings accounts, cash ISAs (Individual Savings Accounts), and notice accounts.

Investment Services: Some building societies offer investment services to help their members grow their wealth. They may provide investment products such as ISAs, bonds, and stocks and shares ISAs, allowing members to invest their savings and potentially generate additional income or capital gains.

Financial Advice: Building societies often provide financial advice to their members. They have qualified advisors who can assist members in making informed decisions regarding mortgages, savings, investments, and other financial matters. The aim is to guide members towards making the most suitable choices based on their individual circumstances.

Community Support: Building societies often engage in community support initiatives. They may sponsor local events, donate to charities, or support community projects. Building societies aim to be active members of the communities they serve and contribute to their development and well-being.