David Finlay: Woolwich

4The market for ethical and green mortgages is currently not that large. This may, in part, be because customers have been less concerned about who they borrow from and who they invest with, and be more concerned about the rate that is being applied to the loan or the investment.

I don’t believe the usual search engines used for selecting a product have the sophistication to allow brokers to put in ‘green’ or ethical mortgages as a filter and therefore be able to identify those lenders who offer specific green mortgages. However, there is always the ultimate search engine, ‘the Web’. If you type in green or ethical mortgages the same three lenders keep reappearing.

The Co-operative bank – it donates to climate care to offset around 20% of the home carbon dioxide production for every house mortgaged.

Norwich & Peterborough Building Society – it will plant five trees for each mortgage for the first five years of the advance, provided the home meets certain qualifying criteria.

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The Ecology Building Society – it only provides mortgages to those whose building plans benefit the environment.

What most major high street lenders do not shout loudly about and is generally not known by both their broker partners and customers is the work that banks like Barclays do in the background to help promote the environment. Barclays Group chairman, Marcus Agius, for example, will be hosting a climate change debate in Brussels soon, with members of the European parliament who have a role in environmental care along with others such as Dr Wolfgang Palz, chairman for the World Council for Renewable Energy. Barclays is keen to stimulate climate conscious thinking and behaviour through its relationships with customers, colleagues, regulators and other stakeholders. This forms part of Barclays strategy to reduce CO2 emissions by improving energy efficiency. Buying renewable energy where available and offering products and services that help customers tackle their carbon emissions. Barclays recently won an award for the efforts it is undertaking on climate change.

Many other lending institutions will have similar company policies, and may be taking similar steps, on various aspects of environmental care. So you need to explain the direct and indirect approaches of the lending institutions and then once informed, your client can make their choice. n

David Sheppard: Perception Finance

4 The first thing to ask your client is what they are looking for, as there are various interpretations of a green mortgage, so it is important you have an understanding of what your client hopes to achieve with this.

You are correct that there are not many from which to choose. If your client is looking for the ethical stance as their aim, then The Co-operative Bank has had this in place since 1992. It covers areas like human rights, the arms trade and animal welfare. 

On the other hand, if your client is more interested in ecologically focused lenders then, as well as The Co-operative, they also have Norwich & Peterborough (N&P), which has allowed green mortgages since 1998, Yorkshire Bank, and Ecology Building Society, who all offer varying benefits to clients for taking a mortgage out with them. 

These range from discounts on the rates for doing home improvements that will make the home more environmentally friendly to planting trees for every mortgage taken out. N&P does the latter of these with a number planted each time a green mortgage is completed.

If they do go down this route they may also be interested in looking into the Government’s green homes service which connects homeowners with firms offering discounted or free energy saving products such as loft or cavity wall insulation.

And if they are planning to buy a new build property they should check its rating for environmental sustainability too, as some new builds do not meet the voluntary standards.

As mentioned at the beginning, the best start is to find out what the clients intentions are as the other option could be to take out a standard mortgage and make a certain donation to a charity that fits these. 

If this means that they can get a mortgage with a lower interest rate, a proportion of the annual saving in interest could be used charitably to better reflect the wishes of your client. This may also see the client receiving information from the charity to outline how their money is being used so they feel more involved. n