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
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Mortgage Provider
Cheltenham & Gloucester
Green/Ethical Products
None
Ethical Lending or Insurance
Cheltenham & Gloucester does not lend commercially.
Responsible Lending
1. Credit Lending
Cheltenham & Gloucester offers LTV (loan-to-value) rates up to 90%, matching the suggestions of the FSA’s Turner Review that borrowers should have at least a 10% deposit for a mortgage.
The bank does not publish its LTI (loan-to-income) rates, however, for which the Review suggests lending 3.5 times the annual wage of a single applicant.
The bank does not offer unsecured credit, for example personal loans.
2. Debt Warning
The bank runs a generic repossession warning for mortgage customers. It does not carry a link to the FSA Debt Test or an equivalent tool on its website. However, the bank does provide tools for customers to calculate their borrowing and repayment amounts and terms which carries a generic repossession warning at the end.
3. Debt Management and Advice
The bank recommends that customers seek free debt advice and provides links to organisations and websites including Consumer Direct, Citizens Advice Bureau, the FSA’s Money Made Clear website and the National Debtline.
The bank states that it will:
- Allow customers a ‘reasonable period of time’ to pay back their debt
- Talk to an agency which gives debt advice, for example Citizens Advice, if the customer requests it
- Offer to send a debt counsellor to discuss the customer’s financial circumstances and add the fee for same to the mortgage account
- Attempt to arrange a new payment plan
- Offer to change the method the customer makes their payments by or the date they make them
- Consider extending the mortgage time period, thus reducing monthly payments
- Consider a change in mortgage type to reduce monthly repayments
Payment holidays are offered but no information was found with regard to their terms and conditions.
The bank also outlines the steps leading up to repossession of property/court action. It states that if it repossesses a customer’s home it will give them advice about getting in touch with their local authority to find somewhere else to live. No evidence was found that the bank engages with organisations such as Shelter and the Citizens Advice Bureau to work out re-housing arrangements with the customer or on the customer’s behalf.
Financial Exclusion
Cheltenham & Gloucester make the following access provisions for the disabled:
- Typetalk and textphones for telephone banking
- Internet banking for disabled customers
- Access for disabled customers at many C&G branches
- Information in large print, audio cassette and Braille
Environment
Parent company, Lloyd TSB’s, environment policy applies across the group and covers the key areas of climate change/energy efficiency and waste management. The policy also contains a commitment to continued improvement in environmental performance.
Carbon Neutral
No direct commitment, but parent company, Lloyd TSB’s, goal to reduce the carbon emissions generated by its operations by 30 per cent by 2012.
Equal Opportunities
Lloyd TSB’s group-wide policy covers the key areas of gender, race, disability and sexuality.
Women on the Board
No data found.
Voluntary Standards & Initiatives
No evidence. The parent company a signatory/member of a number of relevant charters, initiatives and organisations including:
Cheltenham & Gloucester
- Savings
- Mortgages
Cheltenham & Gloucester
Cheltenham & Gloucester
Chief Office
Barnett Way
Gloucester
GL4 3RL
