Mortgage Overview
A mortgage is the biggest loan most people will take out in their lifetime. But just how is this loan funded?
Who else does your mortgage provider do business with? Might they also lend to big corporations involved in areas you don't approve of? Do they lend responsibly to their customers and offer assistance to those who fall into financial difficulty? Do they offer incentives to environmentally-sound projects?
If you're thinking of buying property or your existing mortgage is up for renewal, this section will help you find a green and ethical provider.
Find out about your current or prospective provider
What are the green and ethical options?
Find out about your current or prospective provider
Use the mortgage search to find out more about your current or prospective mortgage provider's green and ethical credentials. Key areas considered are responsibility toward customers, financial exclusion, equal opportunities, environment and also whether they have an ethical lending policy or guidelines in place.
Responsible lending
The importance of responsible lending cannot be overemphasized. The recent global economic downturn is often attributed to the 'sub prime crisis'. This refers to the granting of loans to people who are considered to be in higher risk categories - those more likely to default or who have a poor credit history, for example.
This type of lending is not problematic in itself - credit unions and community development finance institutions regularly lend to sub prime candidates.
Instead, irresponsible lending to customers in the sub prime category is the problem. In the build up to the crunch some financial institutions were lending 100% mortgages (and in some cases more) to people who would not be able to make their repayments in the long term.
Key questions to ask: Does your bank have responsible lending policies that ensure that its products are targeted in an appropriate manner? And does it provide advice or debt management services to customers who fall into financial difficulty?
What are the green and ethical options?
- Co-operative Bank: has a well-recognised ethical policy in place that governs all its lending decisions and products including mortgages. It also offers a specific Green Mortgage and re-mortgage product. Additionally it offers a reduced-rate loan to mortgage customers wishing to purchase and install energy efficient home technologies from an approved list.
- Ecology Building Society: has an 'ecological' lending policy which applies across all lending practices. It offers a number of green mortgage options.
- Norwich & Peterborough Building Society: offers a Green mortgage which plants 40 trees per mortgage and available for new homes with a Standard Assessment Procedure (SAP) rating of 100 or higher or to those looking to make their home more energy efficient. It also offers a Brown mortgage which includes a free energy survey and advice on making property energy efficient.
Your next steps
Check out our Next Steps Guide - Mortgages for suggestions on how to find the right green and ethical mortgage provider for you as well as the questions you should be asking your current or prospective provider.
Mortgage Search
Mortgage Provider
Cahoot
Green/Ethical Products
None
Ethical Lending or Insurance
It is not clear whether the parent company, Abbey’s (Santander) policy can be applied to Cahoot’s operations.
Responsible Lending
1. Credit Lending
No information regarding Cahoot’s LTV (loan-to-value) and LTI (loan-to-income) rates were found. These relate to the percentage of a property’s value and how many times a customer’s gross income the bank will lend. However Cahoot’s parent company, Abbey, offers LTV mortgage rates of up to 90%. These compare favourably with the FSA’s Turner Review suggestion of a maximum LTV of 90%, i.e. the borrower should have at least a 10% deposit. Specific figures for Abbey’s LTI rates were not found.
The bank says it uses credit rating information to assess credit card applications but no details of this or how it assesses personal loan applicants were found.
No policy was found to avoid or prevent offering unrequested increases in credit limits to customers.
2. Debt Warning
The bank issues the generic warning to its mortgage customers: ‘Your home may be at risk if you do not keep up repayments on your mortgage.’
No warnings were found in relation to the consequences of falling behind on payments on unsecured credit.
The bank does not refer customers to the FSA’s Debt Test or an equivalent test. This test is designed to help customers find out whether they have, or are likely to have, problems with borrowing.
3. Debt Management and Advice
No policies were found on payment default and handling payment problems, nor were any of the stages involved in the repossession process or court action laid out. No evidence that payment holidays are offered to either secured or unsecured loan customers was found.
No evidence was found that the bank offers re-housing advice or liaises with organisations such as Shelter and the Citizens Advice Bureau to work out re-housing arrangements with mortgage customers facing repossession.
Financial Exclusion
Cahoot is an internet bank with accessibility for disabled customers. Paperwork in Braille or large print is also available.
Environment
It is not clear whether the parent company, Abbey’s (Santander) policy can be applied to Cahoot’s operations.
Carbon Neutral
No evidence of a pledge regarding making its business operations carbon neutral was found.
Equal Opportunities
It is not clear whether the parent company, Abbey’s (Santander) policy is applied to Cahoot’s operations.
Women on the Board
No data found.
Voluntary Standards & Initiatives
Not by itself, but its parent company a signatory/member of:
Cahoot
- Current Accounts
- Savings
- Loans
- Mortgages
Cahoot
Cahoot
Abbey National House
2 Triton Square
Regent's Place
London
NW1 3AN
