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
Ecology Building Society
Green/Ethical Products
- Earthwise Cash ISA
- Ecology mortgages
- Ecological lending
- Charity deposit account
Ethical Lending or Insurance
The Ecology Building Society has an ‘ecological’ lending policy which applies across all lending practices. The society says that its lending is governed by the principle of sustainable development. This manifests in its lending policy as:
- Saving of non-renewable energy or other scarce resources
- Growth of a sustainable housing stock
- Development of building practices, ways of living or uses of land having, in each case, a low ecological impact
Responsible Lending
1. Credit Lending
Ecology offers an LTV (loan-to-value) rate between 50% and 70% depending on the mortgage product. This compares very favourably with the suggestions of the FSA’s Turner Review that a maximum of 90% of a property’s price be loaned i.e. that borrowers should have at least a 10% deposit for a mortgage. No information about its LTI (loan-to-income) rates was found, however. The Review suggests that 3.5 times the annual wage of a single mortgage applicant is an affordable level.
2. Debt Warning
Ecology issues the generic warning: ‘Your home may be repossessed if you do not keep up repayments on your mortgage.’
The building society refers to the FSA Debt Test on its site. This test is designed to help customers find out whether they have, or are likely to have, problems with borrowing. It also has tips on what to do if customers find themselves in difficulty.
3. Debt Management and Advice
In terms of support for customers who default on their payments or are experiencing financial difficulty, the building society refers them to the Citizens Advice Bureau and Consumer Credit Counselling Service (CCCS) for free debt advice. Additionally, it states that it will:
- Talk to any debt advice agency the customer is dealing with if requested
- Give the customer ‘reasonable time’ to pay back the debt
- If possible, arrange a new payment plan
- Change the way payments are made, or the date they are made on
- Allow the customer to pay back their mortgage over a longer period of time, thus reducing monthly payments
- Change the type of mortgage
The building society further outlines the steps involved in repossession/court action and says that it ‘might’ allow the customer to remain in the property while they sell it themselves.
No information was found as to whether the building society 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 re-possession.
Financial Exclusion
The building society does not offer any specific products to the financially excluded. However, the minimum opening balance on their savings account is £25.
The building society only has 10,000 members and does not have any branches and therefore accessibility provisions in that regard are not application. However, the head office building is wheelchair accessible with onsite facilities including tailored toilet facilities and a lift.
While it does not offer documents in Braille or audio formats, it states that it would produce large print brochures in-house if requested. It also states that with such a small membership it cannot offer leaflets in different languages.
The building society’s website is meets AA accessibility standards.
Environment
The society’s policy addresses energy efficiency and waste management and shows a commitment to ongoing improvement of performance in these and a variety of other environmental areas.
Carbon Neutral
The Ecology Building Society’s business operations are carbon neutral. In addition to its neutrality it is seeking to offset the carbon emissions created by its activity from 1981 (its year of inception) to 2003 through programmes with the Carbon Neutral Company and a local organisation, Treesponsibility. The emissions for recent years are subject to an offset programme with the organisation co2balance.
Equal Opportunities
No specific policy was found. The building society only employs 18 members of staff.
Women on the Board
Figures from 2007 indicate that 37.5% of board members are women.
Voluntary Standards & Initiatives
Ecology is a partner with:
Charitable Giving
The society donated 0.45% of its pre-tax profits in 2007.
Ecology Building Society
- Mortgages
- Savings
Ecology Building Society
Ecology Building Society
7 Belton Road
Silsden
Keighley
West Yorkshire
BD20 0EE
