How to go green #2 Green mortgages

Fixed rate or flexible? Interest only or payment? If that wasn’t mind boggling enough, now the ethical stance of your mortgage lender is becoming a vital factor when choosing a mortgage. More and more of us care where our money is being placed and want to make environmentally friendly and ethically sound investments.

Choosing an ethical mortgage can also improve the value of your home. From June, sellers will have to provide an energy performance certificate as part of their Home Information Pack, or HIP, with a rating score of A-H. Low rated houses could become harder to sell. According to Andrew Winter, presenter of Channel Four's Selling Houses: "Having an energy efficient home will make it more attractive and add pounds to the value".

Housing minister Yvette Cooper wants mortgage lenders to come up with incentives for homeowners to improve their energy efficiency at the time of taking out a mortgage.

There are a number of mortgages on the market to help you make your home energy efficient and put something back into the environment:

1. Co-operative bank
   • Best known ethical High Street bank – voted number one ethical financial institution (NOP February 2006)
   • The Co-op will make annual payments to climate care projects to offset your household CO2 emissions for the life of your mortgage
   • They ethical check each of their business partners - last year they turned away over £10 million from businesses whose activities were in conflict with their Ethical Policy
   • You receive a free energy efficiency report for your home
2. Ecology building society
   • Base decisions on whether a property will generate a benefit to the environment
   • Lending is based on the property, not the individual
   • Will support new property builds made from sustainable or recycled materials
   • Specialises in mortgages for renovation projects and regeneration of derelict properties to encourage reuse of space and materials
   • Can be flexible on providing funds for extra energy efficiency improvements
3. Norwich and Peterborough building society
   • Offer green mortgages to new energy efficient properties (Standard Assessment Procedure rating of at least 100) or homes wanting to improve their energy efficiency
   • They will plant 40 trees over 5 years to offset your home’s CO2 emissions
   • Also offer brown mortgages for conversion or renovation projects with a free energy efficiency survey
4. Universal building society
   • With their CarbonNeutral mortgage, Universal make a donation to CarbonNeutral Newcastle which aims to make Newcastle the world’s first carbon neutral, zero CO2 city
   • You receive a free energy efficiency report for your home to help save energy

Where is your money going?

Mortgage lenders and brokers are expecting the demand for green to grow, but even if you don’t take out a dedicated green mortgage, it’s still important to question the ethical policy of your mortgage lender. Look at the company ethos on climate change, the environment and human rights before taking out a policy with them.