Building Society flotation possible or not ?


A

Anne.Boyd41

Hello,

I am about to pay off my mortgage with Leek United Building Society,
however I remember a few years ago many Building Society's floated and
account holders got some good bonus's .
..
Unfortunately for me Leek didn't do it then, is all that dead now, or
is there a chance worth waiting for that Leek may yet do it, making it
worthwhile me keeping a very small mortgage with them to qualify
rather than paying it all off?
..
Advice or opinion would be appreciated.
..
Thanks in anticipation, Annne.
 
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R

Roger Mills

In an earlier contribution to this discussion,
Hello,

I am about to pay off my mortgage with Leek United Building Society,
however I remember a few years ago many Building Society's floated and
account holders got some good bonus's .
.
Unfortunately for me Leek didn't do it then, is all that dead now, or
is there a chance worth waiting for that Leek may yet do it, making it
worthwhile me keeping a very small mortgage with them to qualify
rather than paying it all off?
.
Advice or opinion would be appreciated.
.
Thanks in anticipation, Annne.
Assuming they're still a Mutual society, it's *possible* that they might
de-mutualise in future - but a lot less likely than it used to be. This is
because all such societies now require any new customers opening an account
to agree to assign any windfall payments to charity. This effectively
prevents a large group of people from opening accounts and then passing a
motion to de-mutualise at a general meeting. So they can no longer be
*forced* by relative outsiders to de-mutualise.

However, if they *do* do it, people whose accounts pre-date the rule changes
will still benefit.
--
Cheesrs,
Roger
______
Email address maintained for newsgroup use only, and not regularly
monitored.. Messages sent to it may not be read for several weeks.
PLEASE REPLY TO NEWSGROUP!
 
G

gbh

Roger said:
In an earlier contribution to this discussion,


Assuming they're still a Mutual society, it's *possible* that they might
de-mutualise in future - but a lot less likely than it used to be. This is
because all such societies now require any new customers opening an account
to agree to assign any windfall payments to charity. This effectively
prevents a large group of people from opening accounts and then passing a
motion to de-mutualise at a general meeting. So they can no longer be
*forced* by relative outsiders to de-mutualise.

However, if they *do* do it, people whose accounts pre-date the rule changes
will still benefit.
In the present financial climate the remaining building societies are
unlikely to de-mutualize. With the loss of market funds banks are
re-learning the value of customers. On the whole, building society
savers are far more loyal.
 
N

Norman Wells

Roger said:
In an earlier contribution to this discussion,


Assuming they're still a Mutual society, it's *possible* that they
might de-mutualise in future - but a lot less likely than it used to
be. This is because all such societies now require any new customers
opening an account to agree to assign any windfall payments to
charity. This effectively prevents a large group of people from
opening accounts and then passing a motion to de-mutualise at a
general meeting. So they can no longer be *forced* by relative
outsiders to de-mutualise.
However, if they *do* do it, people whose accounts pre-date the rule
changes will still benefit.
Provided the account is still in existence. I thought paying off a mortgage
closed it.
 
R

Ronald Raygun

Norman said:
Provided the account is still in existence. I thought paying off a
mortgage closed it.
Which is why the OP suggested *not quite* paying it off.
 
M

Mark

Hello,

I am about to pay off my mortgage with Leek United Building Society,
however I remember a few years ago many Building Society's floated and
account holders got some good bonus's .
.
Unfortunately for me Leek didn't do it then, is all that dead now, or
is there a chance worth waiting for that Leek may yet do it, making it
worthwhile me keeping a very small mortgage with them to qualify
rather than paying it all off?
.
Advice or opinion would be appreciated.
I'd have thought it would be better to pay it off and avoid paying any
more interest than wait for a slight possibility of getting a windfall
payment.

--
(\__/) M.
(='.'=) Owing to the amount of spam posted via googlegroups and
(")_(") their inaction to the problem. I am blocking most articles
posted from there. If you wish your postings to be seen by
everyone you will need use a different method of posting.
See http://improve-usenet.org
 
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N

Norman Wells

Ronald said:
Which is why the OP suggested *not quite* paying it off.
If they allow that, then of course the account remains open, and membership
rights presumably continue.

Though de-mutualisation might now be a distant prospect, as you say, there
are still advantages in being a member of a small society, which may well be
snapped up in the current economic climate by a larger one. You would then
still be eligible for a payment of perhaps a few hundred pounds. I think
the Catholic Building Society was just recently taken over in just such a
way for example. And before that there were the Portman and the Lambeth,
both taken over by Nationwide.
 
T

Tim

In the present financial climate the remaining building
societies are unlikely to de-mutualize. With the loss of
market funds banks are re-learning the value of customers...
.... and the value of their shareholders, through Rights Issues.
What's the equivalent for a building society, to a Rights
Issue for a bank? Oh yes, it's them de-mutualising...


On the whole, building society savers are far more loyal.
Is that more valuable than the funds
that would be realised from floating ... ?
 
T

Tim

I'd have thought it would be better to pay it off
and avoid paying any more interest than wait for
a slight possibility of getting a windfall payment.
If they only left (say) £100 on the mortgage, then the
mortgage interest might only be around £7 per year.
If they invested the £100 (that they didn't use to pay
off all the mortgage) in a good savings a/c, then they
might receive around £5 per year interest (net of tax).

That means they'd only be paying around £2 per
year to have the chance of sharing any windfalls...
 
R

Ronald Raygun

Tim said:
If they only left (say) £100 on the mortgage, then the
mortgage interest might only be around £7 per year.
If they invested the £100 (that they didn't use to pay
off all the mortgage) in a good savings a/c, then they
might receive around £5 per year interest (net of tax).

That means they'd only be paying around £2 per
year to have the chance of sharing any windfalls...
Another issue is the type of account. If it's of the flexible
variety, the borrower may, by keeping the account open, retain
the right to re-borrow up to the amount originally borrowed,
without having to be re-approved. This may be a much bigger
advantage than the prospect of a windfall.
 
M

Mark

Another issue is the type of account. If it's of the flexible
variety, the borrower may, by keeping the account open, retain
the right to re-borrow up to the amount originally borrowed,
without having to be re-approved. This may be a much bigger
advantage than the prospect of a windfall.
Agreed.

If the OP is expecting a windfall, mightn't the amount be linked to
amount borrowed?

--
(\__/) M.
(='.'=) Owing to the amount of spam posted via googlegroups and
(")_(") their inaction to the problem. I am blocking most articles
posted from there. If you wish your postings to be seen by
everyone you will need use a different method of posting.
See http://improve-usenet.org
 
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R

Ronald Raygun

Mark said:
If the OP is expecting a windfall, mightn't the amount be linked to
amount borrowed?
Probably not. AIUI it has been the case with previous demutualisations
that you are considered a member if you have *any* account (deposit
or loan) and that every member receives an equal share of the pot, no
matter how much you have invested or borrowed.

The rules might vary from society to society, though.

Not sure if you're counted as several members if you've several accounts.
 
A

AndyC

Mark said:
I'd have thought it would be better to pay it off and avoid paying any
more interest than wait for a slight possibility of getting a windfall
payment.
Given that you can invest £3600 pa in cash in a tax free ISA generating 6 to
6.5% tax free, depending on the mortgage deal you have, you could even be
better off.

The other point to consider is who will take care of the property deeds once
there is no mortgage. The mortgage company will not want them anymore which
means either lodging them with a bank or solicitor for safe keeping which
will cost. For that reason alone, it is probably worth keeping a small
mortgage on any property.
 
N

Norman Wells

Ronald said:
Probably not. AIUI it has been the case with previous
demutualisations that you are considered a member if you have *any*
account (deposit
or loan) and that every member receives an equal share of the pot, no
matter how much you have invested or borrowed.

The rules might vary from society to society, though.

Not sure if you're counted as several members if you've several
accounts.
You usually qualify once if you're a saver, and once if you're a borrower,
so it's possible to receive the payout twice over. The payout doesn't
usually depend on how much you owe on your mortgage, but there is often a
sliding scale for savers with everyone receiving a minimum amount, plus a
set percentage of any higher savings balance up to a certain maximum. But
they do differ, and societies are free to make their own rules.
 
A

Anne.Boyd41

Dear all,
Thank you so much for your very helpful replies, on the basis of them
I will keep a very small mortgage on. Around £100 left on will
hopefully secure any rights referred to, and save the problem of deed
security into the bargain.
Many Thanks again to everyone who replied.
Anne.
 
T

Tim

The other point to consider is who will take care of the property
deeds once there is no mortgage. The mortgage company
will not want them anymore which means either lodging them
with a bank or solicitor for safe keeping which will cost...
.... or just chuck 'em in a shoe box and
stick it in the wardrobe. No probs!

[Assuming, as most are, they are registered.]
 
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M

Mark

Given that you can invest £3600 pa in cash in a tax free ISA generating 6 to
6.5% tax free, depending on the mortgage deal you have, you could even be
better off.

The other point to consider is who will take care of the property deeds once
there is no mortgage. The mortgage company will not want them anymore which
means either lodging them with a bank or solicitor for safe keeping which
will cost. For that reason alone, it is probably worth keeping a small
mortgage on any property.
My building society sent me the deeds, saying that they no longer
wanted to look after them (or a reason like that). The mortgage is
still running.


--
(\__/) M.
(='.'=) Owing to the amount of spam posted via googlegroups and
(")_(") their inaction to the problem. I am blocking most articles
posted from there. If you wish your postings to be seen by
everyone you will need use a different method of posting.
See http://improve-usenet.org
 
A

Andy Pandy

gbh said:
In the present financial climate the remaining building societies are
unlikely to de-mutualize. With the loss of market funds banks are
re-learning the value of customers. On the whole, building society
savers are far more loyal.
But they might merge, like Portman and Nationwide (and some other BS
merged with Portman before that). Bonuses were paid to Portman members
when they merged with Nationwide.
 
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G

Godlove Katanga

Ronald Raygun said:
Probably not. AIUI it has been the case with previous demutualisations
that you are considered a member if you have *any* account (deposit
or loan) and that every member receives an equal share of the pot, no
matter how much you have invested or borrowed.

The rules might vary from society to society, though.

Not sure if you're counted as several members if you've several accounts.
 
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