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
Yorkshire Building Society
Green/Ethical Products
- Flexible Home Energy Efficiency Additional Loan (restricted to Yorkshire BS’s mortgage customers only)
Ethical Lending or Insurance
No details of an ethical lending policy was found. However, as this is a mutual building society it is less likely to lend or be exposed to typically ‘unethical’ commercial interests.
Responsible Lending
1. Credit Lending
Yorkshire Building Society offers a LTV (loan-to-value) up to 85% of the purchase price or valuation for the property. This compares 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.
Figures for its LTI (loan-to-income) rates were not found. In this instance the Turner reviews a rate of 3.5 times gross annual income for single applicants.
The building society may use an automated system, such as credit scoring, to assist in its lending decisions. It does not specify whether it runs checks through credit reference agencies either.
2. Debt Warning
The building society issues the following warnings to its customers:
- ‘Your home may be repossessed if you do not keep up repayments on your mortgage or any other debt secured on it.’
- ‘Consolidating your debt may increase the amount you pay back overall and extend the repayment period for your debts.’
No evidence was found that the building society uses or recommends the FSA Debt Test or an equivalent. This facility is designed to help customers find out whether they have, or are likely to have, problems with borrowing.
3. Debt Management and Advice
In outlining its policies with regard to customers in financial difficulty, the building society says it will:
- Contact customers ‘as soon as possible’ to discuss their situation
- Look at arranging a new payment plan
- Consider changing the way payments are made, or the date they are made
- Allow customers to pay their mortgage over a longer period of time, thus reducing monthly payments
- Change the type of mortgage the customer has
- Arrange for debt counsellor visit (the cost may be charged to the mortgage account)
- Give customers ‘reasonable time’ to pay back the debt
- Talk to an agency like Citizens Advice Bureau to arrange a payment plan, if requested
It further outlines the steps involved in the repossession process.
Payment holidays are offered to customers who have previously overpaid their mortgage up to the amount they have overpaid only.
No information was found with regard to provisions for customers with unsecured loans experiencing financial difficulty.
No evidence was found that 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 does not offer any products or services to the financially excluded, nor does it appear to work in partnership with credit unions or offer preferential lending within deprived communities based on the data in the public arena. As a mutual building society funding microfinance projects is beyond its business remit.
The society does offer branch accessibility to customers with mobility difficulties; blind and partially sighted customers; and deaf, hearing impaired and speech impaired customers. Most branches include:
- Staff who are informed about disability issues
- Level access or wheelchair ramps or assistance buttons at entrance
- Power assisted entrance doors
- Hearing aid induction loops
- Sign language interpreters by appointment
- The ability to request account correspondence and marketing literature in alternative formats
Environment
The society expresses a commitment to improve its performance in the key areas of energy efficiency and waste management.
Carbon Neutral
The society’s business operations went carbon neutral in 2007.
Equal Opportunities
The society’s equal opportunities policy addresses the key issues of gender, race, disability and sexuality.
Women on the Board
18.2% of the society's board are women according to 2007 figures.
Voluntary Standards & Initiatives
None
Charitable Giving
The society donated 0.62% of its pre-tax profits in 2007.
Yorkshire Building Society
- Savings
- Loans
- Credit Cards
- Mortgages
- Insurance (Motor, Home, Life, Mortgage Protection)
Yorkshire Building Society
Yorkshire Building Society
Yorkshire House
Yorkshire Drive
Bradford
West Yorkshire
BD5 8LJ
