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
Intelligent Finance
Green/Ethical Products
None
Ethical Lending or Insurance
No evidence of an ethical lending policy.
Responsible Lending
1. Credit Lending
Intelligent Finance offers an LTV (loan-to-value) rate of up to 75%. This compares very favourably with the FSA’s Turner Review suggestion 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 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 solo borrower.
The bank applies a credit scoring system which allows it to assess the level of risk associated with a customer’s application. The scoring system incorporates information from credit reference agencies.
The bank no longer offers unsecured credit, for example personal loans and credit cards.
2. Debt Warning
The bank issues a generic warning on repossession which includes information on negative equity.
No information as to whether the bank uses the FSA Debt Test or an equivalent system was found. This facility is designed 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
The bank does not publicly provide details of any policies it has with regard to payment default and handling payment problems.
Though not fully outlined, the bank states that customers can take two monthly payment holidays each year but not during the first six months, the fixed rate period or the last three years of the mortgage. It further states that interest is still charged along with missed payments and that this is to be repaid over the customer’s remaining term.
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
The only provisions for the financially excluded found are Typetalk and AA-level website accessibility for disabled customers.
Environment
Parent company HBOS’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 performance via an organisation-wide environment management system.
Carbon Neutral
HBOS’s business operations became carbon neutral in 2007.
Equal Opportunities
HBOS’s group-wide policy takes into consideration the key equality issues of race, gender, sexuality and disability.
Women on the Board
No data found.
Voluntary Standards & Initiatives
Not by itself, but the parent company a signatory/member of:
Intelligent Finance
- Current Account
- Mortgage
- Savings
- Insurance (Life, Accident/Sickness/Unemployment, Building and Content)
