Bank or building society for a mortgage?

Both banks and building societies lend mortgages, and for most borrowers the difference is not about who is cheaper. It is about who owns the lender, how it is run, and what happens to your deal when the fixed period ends. A building society is a mutual institution offering savings and mortgage accounts and, often, a wide range of other financial services¹. A bank is owned by its shareholders. Both are regulated in the same way when they lend you a mortgage.

The Bank of England base rate, which is the rate of interest the Bank pays to commercial banks, building societies and financial institutions that hold money with it, was held at 3.75% on 17 September 2026, the sixth consecutive hold². That matters because tracker mortgages follow the base rate plus a set margin, and standard variable rates can be influenced by it. Fixed-rate deals do not move during the fixed period, whatever the base rate does.

The practical question is not which type of lender is better. It is which deal suits your circumstances, whether you apply direct or through a broker, and what you do when your current rate ends. This page sets out how the two compare, what each costs, and where to get free help.

Banks and building societies both lend mortgages

The starting point is that both types of lender offer the same basic product: a loan secured on your home. Building societies approved 85,234 mortgage loans in the first quarter of 2023 alone⁷. Over the past three years, UK building societies and mutual-owned banks provided more than 360,000 mortgages to first-time buyers⁸.

What differs is ownership. A building society is owned by its members, the people who save with it and borrow from it. A bank is owned by its shareholders. The Building Societies Association represents all 42 UK building societies, as well as two mutual-owned banks and 7 credit unions⁴. That mutual structure is the main structural difference between the two, and it shapes how each is run.

There are limits to what either will lend on. Banks and building societies do not offer mortgages for buying mobile homes⁹, and you will not be able to get a mortgage to buy a houseboat from a high street bank or building society¹⁰. For self and custom build projects, some building societies do provide finance, including Bath Building Society, Buckinghamshire Building Society and Swansea Building Society¹¹.

Both types of lender also operate under the same consumer protections. It is against the law for a bank or building society to discriminate against you, for example, because of your race, sex, disability, religion or sexuality¹². Unless there is a reason for them to think otherwise, all banks and building societies will assume that you can understand the credit agreement and have the capacity to make a decision about your money¹³.

How banks and building societies differ for a borrower

For a borrower, the difference shows up in three places: who the lender answers to, what membership gives you, and how the lender behaves when you already have a mortgage with it.

Building society members have rights that bank customers do not. As a member of a building society you are more than just a customer; unlike a depositor with, or borrower from, a bank you have rights to receive information and to voice your opinions on the way your building society is run¹⁴. If you are both a saver and a borrower with a society, you will still normally have just one vote, except when asked to vote on a conversion or merger, when two separate votes are given¹⁵.

The Building Societies Association says members received an extra £4 billion in additional benefits compared to the rates and benefits offered by banks in 2024/25, a figure that covers building societies' members only and excludes mutual-owned banks⁴. That is a sector-wide figure, not a statement about any individual mortgage deal.

Building societies have also changed over time. Between 1989 and 2000, ten building societies changed their status completely, converting into or merging with a Plc bank¹⁶. So a name that sounds like a building society may now be part of a bank group, and the reverse can also be true.

Applying direct or through a mortgage broker

You can apply for a mortgage direct to a building society, or other type of lender, or, alternatively, use a regulated mortgage broker to help you¹⁷. You will either need to approach a mortgage lender directly or go via a mortgage broker¹⁸. There is no single right route, and the one you choose affects which deals you can see.

Applying direct means dealing with the lender's own staff. Applying through a broker means a regulated intermediary looks at your circumstances and approaches lenders on your behalf. Some lenders take applications only through brokers: Mansfield Building Society, for new mortgage enquiries, states that it accepts applications from mortgage brokers and intermediaries only, and Dudley Building Society says that to apply for a mortgage with it, you'll need to speak to a qualified mortgage broker¹⁷. A Yorkshire Building Society five-year fixed-rate mortgage, for example, was available through Yorkshire's intermediary arm, Accord Mortgages, so you had to apply through a mortgage broker¹⁹.

Once your building society has all your details they will assess your application. Assuming that everything is in order it will then issue you with a mortgage agreement in principle¹⁷. An agreement in principle is not a mortgage offer; it is an indication of what the lender might lend, subject to checks.

The two routes are not always open. Some lenders deal with customers directly: Swansea Building Society has no online application facility and asks customers to contact the Society, arrange an appointment with a local mortgage manager or complete a "Call Me Back" form, while Teachers Building Society asks customers to fill in an online form and one of its mortgage advisors will be in touch to confirm an appointment time¹⁹. Others set out both routes: Yorkshire Building Society offers applying without advice ("execution only") online, or with advice over the phone, and Family Building Society accepts applications directly through its own Mortgage Advisers or through an alternative mortgage adviser²¹. Free, impartial guidance on mortgages is available from MoneyHelper.

Base rate at 3.75% and what it means for mortgage deals

The Bank of England base rate is the rate of interest the Bank pays to commercial banks, building societies and financial institutions that hold money with it²³. It was held at 3.75% on 17 September 2026, the sixth consecutive hold since December 2025². The Bank's rate-setting committee voted 6-3, with three members preferring a rise to 4%³.

How much that affects you depends entirely on your mortgage type.

• Tracker mortgages follow the Bank of England base rate, plus a set margin, for example the base rate plus 1%²¹. When the base rate moves, your payments move.
• Standard variable rates do not have to follow changes in the base rate set by the Bank of England, but they are often influenced by it⁵. Standard variable rates can be influenced by changes in the Bank of England's base rate²⁰.
• Fixed-rate mortgages do not move during the fixed period, whatever the base rate does.

The base rate has moved a long way in recent years. During the tax year 2022 to 2023, the Bank of England base rate, which influences the rates banks pay individuals on their savings, increased from 0.75% to 4.25%²². It later fell: Bank Rate reduced by 0.25% to 3.75% on 18 December 2025²⁴.

There is a separate official link between the base rate and one specific benefit. Support for Mortgage Interest has a standard rate that changes when the Bank of England average mortgage rate differs by 0.5 percentage points or more from the rate in payment²⁵. The Loans for Mortgage Interest Regulations 2017 set the same trigger: the Bank of England publishes an average mortgage rate which differs by 0.5 percentage points or more from the standard rate that applies on that reference day²⁶.

When your fixed rate ends: options with your lender

At the end of your fixed period, you will need to remortgage. If you do not, you will be moved to your lender's standard variable rate, which is usually much more expensive²⁷. That is the single most important date in your mortgage, and it is worth planning for well before it arrives.

Your lender will talk to you about a new deal about 3 to 6 months before the end of the one you have now⁵. Under the Mortgage Charter, your lender can offer a new rate up to six months before your old one expires, and you can change your mind if rates go down⁶. That gives you a window to compare what your current lender is offering against what is available elsewhere.

Your options at that point are:

1. Take a new deal with your current lender. This is a product transfer, and it is usually the simplest route because there is no new application, valuation or legal work.
2. Remortgage to a different lender. This means applying afresh, with a new valuation and legal work, and it may come with fees.
3. Do nothing. You move to the standard variable rate, which is usually much more expensive²⁷.

If you are thinking about switching, check whether your current deal has an early repayment charge, and compare the total cost of the new deal, not just the rate. Free guidance on the choices is available from MoneyHelper.

Home purchase plans: a bank alternative to an interest-bearing mortgage

A home purchase plan is a method of purchasing a property by way of a sale and lease arrangement that does not require the payment of interest²⁹. It is an alternative to an interest-bearing mortgage, and it is used by borrowers who want home finance structured without interest.

The regulatory definition is precise. A home purchase plan is an arrangement under which, at the time it is entered into, a home purchase provider buys a qualifying interest, or an undivided share of a qualifying interest, in land in the United Kingdom, the home purchaser is obliged to buy that interest over the course of or at the end of a specified period, and the individual or a related person is entitled to use at least 40% of the land as a dwelling during that fixed period and intends to do so³⁰.

Where a plan also satisfies the requirements for a regulated mortgage contract, it is treated as a home purchase plan and not a regulated mortgage contract³⁰. The same rule appears in the FCA's guidance: where a contract meets the necessary requirements for both a regulated mortgage contract and a home purchase plan, it will be treated as a home purchase plan only³¹.

In practice, that means a home purchase plan is regulated as its own product, not as a mortgage, even when it looks similar. The terms, the rent element and the buy-back schedule are set out in the provider's own documents, which sit alongside the general rules. Our page on home purchase plans explains how they work in more detail.

Where to get help choosing a lender

Choosing between a bank and a building society is really a question about the deal in front of you, not the type of institution behind it. The rate, the fees, the term and the flexibility matter more than the label on the door.

If you want to compare what is available, a regulated mortgage broker can look across both banks and building societies, including lenders that do not deal with the public directly. If you would rather deal with a lender yourself, you can approach a bank or building society directly and ask what it can offer for your circumstances.

Free, impartial help is available. MoneyHelper provides government-backed guidance on mortgages and on choosing a lender. If you are struggling with payments, StepChange and other debt advice charities offer free help, and your lender must follow rules on how it treats you when you fall behind. The Financial Ombudsman Service can look at complaints about mortgages, including complaints about financial difficulties with mortgages³³.

If you are coming to the end of a fixed rate, our guide to what to do when your fixed rate ends sets out the steps in order. If you want to understand how a lender assesses what you can borrow, see how much can I borrow for a mortgage?.