Tinker, tailor, soldier, spy...

Some niche lenders were founded to serve specific professions, but they still offer good value, says Stephen Pritchard

Most banks today will lend to anyone who meets their financial criteria, but this was not always the case. At the start of the building-societies movement, groups of would-be homeowners came together to raise the money to buy land, often based around a relatively small geographical area.

Most banks today will lend to anyone who meets their financial criteria, but this was not always the case. At the start of the building-societies movement, groups of would-be homeowners came together to raise the money to buy land, often based around a relatively small geographical area.

But location was not the only unifying factor: profession and religion also brought groups together to form societies. A handful of these building societies are still in business today, including the Teachers, Mercantile, Stafford Railway and Catholic building societies. Their lending remits are typically much wider than they were in Victorian times. But many smaller lenders still retain a particular niche.

"If you are looking for a good-value mortgage it is always worth contacting your local building society to see what they have on offer, as many smaller building societies often appear in the top half of best-buy tables," says Adrian Coles, director of the Building Societies' Association. "Many smaller societies lend nationally. Societies are also very innovative in bringing niche products to market, for example several societies will lend on unusual properties."

Societies such as the Mercantile and Stafford Railway, which started for particular professions, now lend nationally. Others are open to all borrowers, but still do the majority of their business with people in a particular walk of life.

And not all the smaller societies are products of the Victorian house-building boom: the Teachers Building Society was formed in 1966; the Catholic, in 1960. Today, the Teachers Building Society still lends mostly to home buyers who work in education. Although anyone can borrow from the society, it does have a number of deals that are open only to people working in education. These include loans for shared ownership and key worker properties, and a three-year, fixed-rate 100 per cent mortgage open to members of the National Union of Teachers.

The Catholic Building Society's remit is more social than religious, and would strike a chord with many hard-pressed home buyers in the current market. The society was formed specifically to help first-time buyers, especially those on low incomes, to get a foot on the property ladder. The society also set out to give single women and widows a chance to buy homes. Today, around a third of the society's borrowers are single women; it also helps buyers with disabilities or those who have had financial problems.

As well as lenders that focus their attentions on specific groups in society, there are some that concentrate on particular properties. Perhaps the best known is the Ecology Building Society, which specialises in loans to owners wanting to renovate old properties, or for self-build projects with a substantial eco-friendly element. The Ecology Building Society's remit is clear from its name, but other lenders also take on trickier properties. Among the banks, Abbey has a good reputation for some of the more complex urban properties, such as flats over shops.

Other lenders, too, have niches. Norwich & Peterborough Building Society lends nationally, and has built up a strong reputation funding self-builders; it has several mortgage options that include releasing funds in stages. This can be critical for a self-builder's cashflow. In Yorkshire, the Skipton BS lends on barn conversions, thatched properties, mill conversions and, more prosaically, high-rises. These are buildings that some lenders are less than keen to accept for mortgages.

But trawling the market for a lender that will take on an unusual property takes time, and may not produce the desired results. While local building societies may have branch lending officers who are able to take on more difficult properties, borrowers looking nationally might find that call-centre staff are unsure of what a lender will, and will not, consider. In these circumstances, a mortgage broker might be a better option, as he or she will know which lenders will accept unusual homes. A good broker will also know the mortgage lender's valuers, and should be able to establish early on whether a property will meet the lending criteria.

"Most of the building societies that started for a particular profession now aim at a wider public. But quite often, the bigger players can beat them on price," says David Hollingworth, a director at London & Country Mortgages. "When it comes to a niche property, doing the legwork yourself can be very time-consuming. A broker will know which lenders have dealt with that sort of property before, and they will have better links to the underwriters and valuers."

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