What is a building society? A member-focused approach to saving and lending

Building societies have been supporting the communities they serve for centuries – known for prioritising people over profit. 

Unlike traditional banks, these member-owned institutions, of which Chorley Building Society is one of the oldest in the UK, the focus is on helping individuals save, borrow, and plan for the future in a way that suits them best. 

In this blog, we’ll explore what a building society is in a little more detail, how we work, and why our mutual model continues to benefit Members and communities alike.

What is a building society?

A building society is a financial institution primarily focused on saving and lending. It’s different from a bank, because it’s owned by its Members, not its shareholders, making it a ‘mutual organisation’. If you bank, save or have a mortgage with a building society, you’re a Member and your best interests are put first. 

‘Mutual’ saving began in the 18th century when a small community of friends came together in hardship, pooling their resources to secure land and build homes, which laid the foundation for collective financial support.

The Chorley and District Building Society (which now trades as Chorley Building Society) was formed in 1859 to help 19th century mill workers buy their own homes, and 17 decades later, we are just as committed to benefiting our Members – borrowers and savers alike – as we were in year one.

The Society is owned by and run for the benefit of its members. When you open a share account, take out a mortgage, or both, you’ll become a member of The Chorley and District Building Society, provided you meet our membership criteria (more of that later).

How does a building society work?

Think of a building society as a ‘mutual’ cooperative financial community: Members are both the owners and the main beneficiaries, so every decision is made with everyone's best interests at heart.

For example, we do not have shareholders to serve, and we’re not listed on the stock exchange. Instead, all our profits go back into the Society to benefit our Members.

Building societies accept deposits and offer various savings accounts, including fixed-rate bonds and ISAs. When you deposit money, you become a member of the society. 

Savers can expect attractive levels of interest on their savings, while for borrowers, building societies make sure your mortgage is affordable, and support is offered if your circumstances change. 

Building society vs bank: what’s the difference?

Banks are crucial for keeping money flowing in the economy. They provide a safe place for your funds, enable people to borrow for major purchases or business growth, and facilitate daily transactions, all while aiming to make a profit for their owners, who are traditionally shareholders.

Building societies are different to banks because they're not just about making money.

As we said earlier, we are not a commercial business, and so we are not responsible for making a profit for shareholders.

Instead, the aim is to help people achieve their big life goals. Any profit is reinvested back into the Society.

The benefits of joining a mutual building society

A building society is a type of financial institution that operates on a ‘mutual’ basis.

Since there are no external shareholders to pay dividends to, any profits made by a building society are typically reinvested back into the business.

This means building societies like ours can invest in improving services for our Members and supporting local communities.

Members have the right to vote on important decisions about how the society is run. This usually happens at the Annual General Meeting, where Members who meet our membership criteria can elect directors and have their say on policies.

If you’d like to know more about our criteria click here to view our Memorandum.

How building societies support local communities

Building Societies are committed to their local communities. They tend to support local groups through various initiatives, including charitable donations, community grants, and employee volunteer schemes.

Some building societies will commit some of their pre-tax profits to charitable causes, whilst others will support their chosen charity partners and help build a better society.

Here at Chorley Building Society, our Chorley High Five initiative is so-called after our board pledged to give a minimum of five per cent of our annual operating profits to support local charities, community groups, not-for-profit organisations and grassroots clubs.

We have undertaken to support good causes with the following aims, mutual to our own, which are:

• Supporting member and community wellbeing
• Tackling poverty and homelessness
• Supporting grassroots sporting activities

Our charity committee, made up of Chorley Building Society colleagues, meets regularly to review applications and award donations.

Savings, mortgages, and more: Services typically offered by building societies

Building societies serve their Members by offering a comprehensive suite of financial services often specialising primarily in savings and mortgage lending.

We provide various savings accounts, from easy access to ISAs and fixed rate bonds, which in turn fund a wide range of mortgage products for first-time buyers, home movers, and buy-to-let investors.

Many societies also extend their offerings to include personal loans and sometimes even current accounts and insurance, supporting members throughout their financial lives.

Savings

From young children to older savers, building societies can offer a great range of savings products.

Easy Access accounts mean that you can save and still have access to your money. There are a range of accounts that include multiple or unlimited withdrawals, available in-branch, online and by post.

You may pick an ISA which offers tax-free savings, which in the current tax year 2026/27 means you can save up to £20,000 per tax year.

For money you won’t need easy access to, a Fixed Rate Bond could help your savings grow. No withdrawals or additional deposits are permitted.

We offer the following savings accounts:

• Easy access accounts
• Cash ISAs
• Junior accounts
• Notice accounts
• Over-60s savings accounts
• Regional savings accounts (available to people living in 14 postcode areas in Lancashire, Cumbria, Cheshire, Liverpool and Greater Manchester)
• Regular saver accounts
• Fixed rate bonds
• Home saver account
• Business savings accounts

Mortgages

For those looking for a mortgage, from first-time buyers to existing home movers, building societies offer a diverse selection with expert help along the way. Those who want to purchase a holiday let mortgage for a second home in England and Wales can also find the support they need.

But as we get older, later life often brings new needs and priorities regarding your home, retirement, finances, family and friends. Expert advice is also available for older borrowers.

Credit renew mortgages are for customers who have successfully recovered from a recent life event that affected their credit profile, even though they aren't credit impaired. These mortgages help those who no longer meet standard lending criteria because of past events.

At Chorley Building Society we manually underwrite all our mortgages, which means we take the time to look individually at each application.  This is a different to a lot of high street banks who use automated processes, that do not always take all circumstances into account.

Discover the full range of Chorley Building Society mortgages here. 

*Your home may be repossessed if you do not keep up repayments on your mortgage*

Life planning

A Will is a legal document that outlines what you want to happen to your property, money and possessions, as well as your dependent children, after you pass away. Will writing is a service offered by some building societies.

At Chorley Building Society, Accord Legal Services are providing Members of the Society with a free consultation and a free basic Will. They also offer a free Will review to our members who already have a Will in place.

A building society can also help you to organise a Lasting Power of Attorney. This document is put in place to make sure a person’s finances and healthcare are dealt with properly in the event that they lose mental capacity.

At Chorley Building Society, we can introduce you to our estate planning services partner, Accord Legal Services, an independent, third-party firm regulated by The National Association of Licensed Paralegals led a STEP accredited legal team.  They can advise you on a lasting Power of Attorney and any other estate planning you may require.

What else is there to know about a building society?

There are currently 42 building societies in the UK.

Building societies serve almost 26 million consumers across the UK and have total assets of over £670 billion.

Together with their subsidiaries, they have helped over 3.5 million families and individuals to buy a home with mortgages totalling over £500 billion, representing 29% of total mortgage balances outstanding in the UK.

They are also helping over 23 million people build their financial resilience, holding over £500 billion of retail savings, accounting for 23% of all cash savings in the UK. Building societies account for 40% of all cash ISA balances.

We hope you enjoyed learning about building societies. We think it is important that our Members know how we are different to a bank, after all we answer to you!