How to find an ethical mortgage?
|Borrowing | Mortgage
Asked by greenbee, submitted
06 July 2010.
My partner and I have decided to buy our first home and looking for an ethical repayment plan that screens activities such as human rights, armaments and labour relationships. Our friend suggested we contact an Ethical Financial Advisor since we will also need to set up life insurance and some providers lend to big corporations involved in areas we may not approve of?
Answered by Justin on 07 July 2010
There are currently only three mortgage lenders that potentially meet your criteria: the Co-operative Bank, its subsidiary Smile and the Ecology Building Society. Given the Ecology Building Society restricts its lending to specialist properties, such as renovations and new build eco-homes, your choice is realistically limited to the Co-Op and Smile.
Both effectively offer the same range of mortgages, which are reasonably competitive, but if they decide not to lend, or you want a wider range of mortgages to choose from, you’ll have to consider lenders who make some effort towards being green, but don’t necessarily screen the activities you mention.
You might find www.yourethicalmoney.org/mortgages/ useful, as it summarises the efforts the larger banks and building societies make towards running an ethical business.
By all means take advice, but try to use an adviser who won’t charge you extra fees. Most lenders pay mortgage advisers a fee of around 0.35% (of the amount borrowed) for introducing a new customer, which should be enough to cover their advice. I’ve no experience of using them, but www.ethicalinvestors.co.uk/ is a well established ethical financial adviser that doesn’t charge extra fees for mortgage advice.
As for life cover, Co-operative Insurance is the only insurer I know of that probably meets your criteria. Make sure you opt for term assurance and compare your quote to conventional insurers, allowing you to judge whether the extra cost of being ethical (if there is one) is worthwhile from your point of view.
Happy house hunting.
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Comment by greenbee at 7:55pm on 08 Jul 2010:
Thanks for the links and interesting to find that many of the newer banks with cool names score low on the ethical criteria tables.