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
First Trust Bank
Green/Ethical Products
- Basic Bank Account (available to customers in Northern Ireland only)
Ethical Lending or Insurance
There is no specific reference to who the bank will and will not lend to in their Code of Business Ethics.
However, parent company AIB applies ethical screening criteria in investments and project finance including, but not necessarily restricted to, areas such as tobacco manufacturing, pornography, gambling, armaments, oppressive regimes, human rights abuses and environmental issues.
In 2007 AIB Corporate Banking launched a €350m sustainable energy fund to support companies operating in the energy sector.
Responsible Lending
1. Credit Lending
First Trust offers a 75% standard LTV (loan-to-value) rate to mortgage borrowers, rising to 90% for first time buyers. This compares favourably with the FSA’s Turner Review suggestion that LTV rates be set at 90%, i.e. that borrowers should have at least a 10% deposit for a mortgage.
The bank has set its LTI (loan-to-income) rates at 3 times gross income for single applicants, against comparing favourably with the Review’s analysis which suggests lending to 3.5 times of income for single borrowers.
The bank automatically conducts searches with a credit reference agency for all loan applicants through its New Applications Processing System (NAPS).
It explicitly states that it does not solicit customers with unrequested increases in credit limits (i.e. on credit cards or overdrafts).
2. Debt Warning
The bank offers the following generic warning to mortgage and secured loan customers: ‘Your home is at risk if you do not keep up repayments on a mortgage or other loan secured on it.’ Warnings about unsecured credit were found in relation to credit cards only.
First Trust uses a ‘Borrowing Wizard’ to calculate monthly loan repayments. However, it is just a calculation, with no related warning system and it is not clearly related to debt management. It does not refer customers to the FSA Debt Test or an equivalent. This facility is designed aims to help customers find out whether you 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
First Trust recommends that customers experiencing financial difficulties talk to them at the earliest opportunity and provides a list of possible circumstances personal and business customers may find themselves in.
The bank states: ‘With your [the customer’s] co-operation we will help develop a plan to deal with your financial difficulties, consistent with your interests and ours and we will tell you in writing what we have agreed. We will also liaise with debt counselling organisations such as Citizens Advice Bureau, business support organisations or your professional advisers where you give us permission.’
It is not specified whether this applies to customers with secured credit (mortgages) or just those with unsecured credit.
Furthermore, no information was available regarding possible payment breaks/holidays for either secured or unsecured loans, though the bank stated in its response to our research that if customers fall into arrears options explored with them include restructuring, interest-only payments or a moratorium.
No evidence was found that the bank offers re-housing advice to customers facing possible repossession or if it liaises with organisations such as Shelter and the Citizens Advice Bureau.
Financial Exclusion
The bank offers a basic account to customers in Northern Ireland.
The First Trust Bank website complies with WA1 accessibility standards (level 2AA) as provided by the World Wide Web Consortium. This standard ensures that website content can be navigated and read by everyone, regardless of their location, experience or the type of computer technology, and impairment such as blindness, partial sight, deafness, dyslexia, tremors or lack of dexterity in hands and fingers.
Environment
First Trust’s environment policy and commitments covers the key areas of energy efficiency and waste management. It also shows commitment to continued improvement of its environmental performance.
Carbon Neutral
No pledge was found to make business operations carbon neutral.
Equal Opportunities
The bank’s equal opportunities statement addresses the key areas: race, gender, sexuality and disability.
Women on the Board
The parent company reports 14% for 2007.
Voluntary Standards & Initiatives
Not by itself, but the parent company, Allied Irish Bank, is a signatory of:
Charitable Giving
First Trust Bank does not indicate any aggregate amount, but the parent company AIB reports at 31 December 2007 that First Trust Bank’s staff charity programme raised £145,000 in the last 18 months for the Staff Charity Hospice Care at Home.
One of the main recipients of charitable donations from the parent company is the ‘Better Ireland’ programme which donated some €2m to children’s groups in 2008.
First Trust Bank
- Current Accounts
- Savings
- Investments
- Credit Cards
- Loans
- Mortgages
- Insurance (Home, Mortgage Protection)
- Student Current Account
- Student Credit Card
