Lenders of money guaranteed by a mortgage are called mortgagees, and borrowers are called mortgagors. There are several kinds of lenders. They can vary greatly as to the kind of mortgage they will offer, the rates of interest they will charge and the maximum number of years over which the loan can be paid back. Building societies lend in two ways: first mortgages for buying a home and second mortgages for improving a home, buying a car or from some other purpose. Second mortgages are likely to be at a higher interest rate and over a shorter term.

Building society mortgages are among the cheapest available, and they allow long repayment terms (sometimes up to 35 years). On the other hand, it is not the case with bank loans. All major building societies belong to the Building Societies Association and are members of the Council of Mortgage Lenders. However, individual societies are free to set their own interest rates. Societies may have different lending policies, and local branch managers often have some discretion in deciding what to do in individual cases. Building societies are mutual organizations owned by their savers and borrowers. However, many building societies are now becoming banks, with shareholders whose profits come from the interest paid by the borrower.

A bank lends in two ways. First, mortgages for buying or improving a home are normally over a 20 or 25 year period at interest rates similar to those of the building societies. Secondly, they give loans for any purpose but are likely to be for a shorter period, say ten years. These loans will be secured on your home. They are relatively expensive because monthly payments need to be high to repay the loan in such a short time, and they are likely to be at a higher interest rate than a first loan.