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
ING Direct (UK)
Green/Ethical Products
None available to UK customers.
Parent Company ING Group provides sustainable equity funds, Postbank Green Notes, and microfinance products.
Ethical Lending or Insurance
To mitigate the environmental and social risks of its financial engagements, ING has developed the Environmental Social Risk (ESR) Management Framework. The Framework consists of a set of three policies:
1. General Policies (see below)
2. Sector-Specific Policies
3. Equator Principles
All wholesale banking activities (e.g. corporate loans, export and commodity finance, project finance, advisory services and client engagement in general) are within the scope of the ESR Framework.
The General ESR Policies cover topics such as:
- Animal testing
- Defence/controversial weapons
- Environmental compliance
- Fur
- Gambling
- Genetic Engineering
- Human Rights
- Nuclear energy
- Pornography
- Tobacco
Responsible Lending
ING Direct UK offers an LTV (loan-to-value) rate of up to 75% and an LTI (loan-to-income) rate of 4 times gross income on a single application. The LTV rate compares favourably with suggestions made in 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. The same review, however, suggests LTI should be 3.5 times the annual wage of a single mortgage applicant. ING states that it uses income multiples as a guide for customers but that affordability checks take precedent in determining how much it will lend.
In terms of credit checking, the bank states that it uses information from both credit reference agencies and a credit scoring system to determine borrower suitability.
2. Debt Warning
The bank issues the generic warning: ‘Your home may be repossessed if you do not keep up repayments on your mortgage.’
The bank does not use the FSA Debt Test. 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
With regard to policies on payment default and handling payment problems, ING Direct has a policy ‘Treating Customers Fairly in Arrears’, which lays out assistance it ‘might’ offer as follows:
- Talk to an agency which gives debt advice (for example, Citizens Advice), if requested
- Give the customer ‘reasonable time’ to pay back the debt
- Arrange a new payment plan
- Change the date payments are made
- Allow the customer to pay back their mortgage over a longer period of time, reducing monthly payments
- Change the type of mortgage
The bank also outlines the process of repossession and the possible consequences if the sale of the house does not generate enough money to repay the full mortgage amount.
The bank states that up to three payment holidays can be taken in any 12-month period, but no more that six during the mortgage term. The circumstances under which payment holidays may be granted are outlined in the mortgage terms and conditions. The bank also supplies a calculator for customers to work out the impact of taking payment holidays on their repayments.
No information was found as to whether 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 re-possession.
Financial Exclusion
ING does not offer any products to low-income/financially excluded customers or communities in the UK nor does it provide support to credit unions or other mutual societies here.
The parent company, the ING Group, funds a number of microfinance projects internationally.
ING has committed to making information on its ‘non-secure’ website accessible.
Environment
NG Group’s Environmental Statement, which applies to all operations, explicitly addresses energy consumption, business travel and paper consumption, but not waste management. However ING monitors and reports data for waste management, energy and water usage in its Corporate Social Responsibility report.
No commitment to the continued improvement of ING Direct (UK) or ING Group’s environmental performance was found.
Carbon Neutral
The ING Group is carbon neutral and has a continuing commitment to reducing emissions across all business units internationally.
Equal Opportunities
ING has a Human Rights Statement which addresses two of our four key equal opportunities issues: gender and race. There is no reference to either sexuality or disability.
Women on the Board
The bank reported 31.2% senior management positions were held by women in 2008.
Voluntary Standards & Initiatives
Parent company, the ING Group, is a signatory/member of:
ING Direct (UK)
- Savings
- Mortgages
- Home Insurance
ING Direct (UK)
ING Direct (UK)
410 Thames Valley Park Drive
Reading
Berkshire
RG6 1RH
