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
West Bromwich Building Society
Green/Ethical Products
None
Ethical Lending or Insurance
No evidence of an ethical lending policy, however, the building society states that it does not ‘knowingly’ deal with business partners that fail to comply fully with the safety, labour and other relevant laws in their respective countries.
Responsible Lending
1. Credit Lending
West Bromwich BS offers LTV (loan-to-value) rates of up to 75%, this compare very 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.
The building society offers an LTI (loan-to-income) rate 3.75 times the first salary plus equivalent of second salary and 2.75 times joint salaries. The Turner Review’s suggests 3.5 times the annual wage of a single mortgage applicant.
The building society considers the credit rating of applicants before lending secured credit. It looks at the information provided by the applicant as well as information obtained from an external credit reference agency.
2. Debt Warning
The building society issues the generic warning: ‘Your home may be repossessed if you do not keep up repayments on your mortgage.’
It does not use the FSA Debt Test which 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
The building society’s Credit Services team, outline options that may be pursued to help customers in financial difficulty as follows:
- Change the due date for payments
- Change the way customers make their payments
- Make an arrangement to split the missed payment over a number of months
- Allow customers to pay back their mortgage over a longer period of time to reduce monthly payments
- Change the mortgage product to reduce monthly repayment amounts
- For those with repayment mortgages, interest only payments may be accepted for a temporary period
- Accept reduced payments on the account for an agreed period (a ‘concession’)
It further outlines the steps leading up to repossession of property/court action and refers customers to a number of external debt advice providers including the National Debtline, Citizens’ Advice Bureau and Consumer Credit Counselling Service (CCCS).
With regard to payment holidays the building society’s ‘offset’ mortgage may allow customers to make underpayments or take payment holidays for a period, if their circumstances change, such as income being reduced or outgoings increasing. To avail of this, customers regular payments must be up-to-date and they should have already made at least one payment.
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 repossession.
Financial Exclusion
The society provides some website and branch accessibility alternatives for disabled customers. We found no evidence that the society offers any other relevant products or services to financially excluded individuals or communities.
Environment
No evidence of an environment policy found. However the society has established an Environment Committee to assess its current environmental footprint and to implement measures to reduce any activities that result in unnecessary waste and energy.
Carbon Neutral
No pledge on making business operations carbon neutral was found.
Equal Opportunities
No evidence of an equal opportunities policy.
Women on the Board
9.09% of board members are women (2008).
Voluntary Standards & Initiatives
None
West Bromwich Building Society
- Savings
- Mortgages
West Bromwich Building Society
West Bromwich Building Society
Principal Office
374 High Street
West Bromwich
West Midlands
B70 8LR
