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
Norwich & Peterborough Building Society
Green/Ethical Products
- Green mortgage (plant 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)
- Brown mortgage (offers free energy survey and advice on making property energy efficient)
- Basic Bank Account
Ethical Lending or Insurance
The society does not have an ethical lending policy in place. However, as Norwich & Peterborough's commercial lending arm only lends to small and medium sized businesses in the UK it is less likely to be exposed to problem businesses.
Responsible Lending
1. Credit Lending
Norwich & Peterborough offers LTV (loan-to-value) mortgage rates up to 80%, comparing favourably with the FSA’s Turner Review suggestion of a maximum LTV of 90%, i.e. the borrower should have at least a 10% deposit. It does not specify a LTI (loan-to-income) rate. The Turner Review’s suggestion is 3.5 times gross annual income. The building society states that it uses an affordability calculator to establish how much can be borrowed, however, this system does not come with clearly defined limitations on the amount of credit available.
The building society uses both credit scoring and credit reference agencies to assess mortgage and personal loan applicants and customers are informed of these checks on application.
2. Debt Warning
The building society uses a generic warning with regard to mortgages: ‘Your home may be repossessed if you do not keep up repayments on your mortgage’. No warnings as to the consequences of payment default for personal loans were found.
It does not refer customers to the FSA’s Debt Test or any equivalent service, though it does refer them to the FSA’s Customer Information and Money Made Clear websites. The debt test is designed to help customers find out whether they have, or are likely to have, problems with borrowing. It does offer access to a ‘budget planner’ for existing customers experiencing financial difficulty.
3. Debt Management and Advice
In their leaflet ‘A Guide for Customers in Arrears’ the building society set out what it will do to help customers experiencing financial difficulties. This includes:
- Contacting the customer to discuss their financial problems
- Talking to a free debt advice agency on their behalf on request
- Looking at possible changes to the customer’s existing payment plans
It also clearly sets out the stages leading up to and after repossession. It states that before repossession it will give the customer ‘advice about getting in touch’ with their local authority with regard to re-housing. The extent of this advice is not illustrated, i.e. whether the building society provides customers with contact details or actually liaises with organisations on their behalf.
Financial Exclusion
The society offers a basic bank account to anyone over the age of 16.
The society states that all its branches are accessible for disabled people. Its website also offers some accessibility options to disabled customers.
Norwich & Peterborough states that it does not lend to disadvantaged communities at preferential rates as a general rule, but in the past has lent at a favourable rate to charitable organisations.
As a building society, NPBS does not fund microfinance projects.
Environment
The society addresses the key issues of energy efficiency and waste management in its environmental policy. This does not contain information regarding the society’s long-term commitment to improved environmental performance however.
Carbon Neutral
The society’s business operations have been carbon neutral since 2007.
Equal Opportunities
The society’s policy addresses the key equality issues of gender, race, disability and sexuality.
Women on the Board
15.4% reported in 2007.
Voluntary Standards & Initiatives
None
Charitable Giving
The society states that it aims to donate around 1% of pre-tax profits to local charities and good causes.
Norwich & Peterborough Building Society
- Current Accounts
- Savings
- Credit Cards
- Loans
- Mortgages
- Insurance
Norwich & Peterborough Building Society
Norwich & Peterborough Building Society
Peterborough Business Park
Lynch Wood
Peterborough
PE2 6WZ
