The mortgage industry of the United Kingdom has traditionally been dominated by building societies, the first of which opened in Birmingham in 1775.
The major lenders include building societies, banks, specialized mortgage corporations, insurance companies and pension funds.
During the four years after the 2007–2008 financial crisis, the UK mutual sector provided approximately 80% of net lending to the housing market.
[2] There are currently over 200 significant separate financial organizations supplying mortgage loans to house buyers in Britain, with Lloyds Bank and the Nationwide Building Society having the largest market share.
[4] One study found that in the five years 1987-1992, the building societies collectively outperformed the UK clearing banks on practically all the major growth and performance measures.
Finally, bad debt provisions relative to advances were only 0.4% for the top 20 societies compared with 2.8% for the four banks.
[5] Though the building societies did subsequently recover a significant amount of the mortgage lending business lost to the banks, they still only had about two-thirds of the total market at the end of the 1980s.
This type of mortgage was typically used by people whose income came from multiple sources, whose salary consisted largely or exclusively of commissions or bonuses, or whose accounts did not show a true reflection of their earnings.
Self-employed people exaggerating expenses to lower taxable income created another group of applicants for self-certification mortgages.
Whilst it's true the restrictions placed have left many creditworthy self-employed borrowers unable to finance, it has created niche markets for newly self-employed or borrowers who chose not to draw all their profits, that are now occupied by numerous specialist lenders.
Examples include: 100% mortgages normally offer higher interest rates than deals with even just 5-10% deposit.
If they sold the property, the sale price would not cover the mortgage and the unsecured loan, so they would be left without a home and still carry some debt.
Typically, would-be borrowers approach their bank for a single range of products, or use an intermediary (mortgage broker) for access to a select panel of lenders, or the whole market.
Although an indication of lending approval, this is not set in stone until the mortgage is formally offered, post valuation of the property and assessment of the necessary supporting documents.
Prepayment penalties (Early Repayment Charges - ERC) are still common, whilst the United States has discouraged their use.