About Green Mortgages

What are they?
These are an environmentally friendly and ethical alternative to traditional mortgages. These lenders will not do business with companies or organisations that damage the environment or if they are involved in 'unethical operations'. These can include nuclear power funding, weapons manufacture or the production of tobacco, to name a few. Green and ethical mortgages both support environmental projects in the UK but also have links to countries where the environment has been damaged.
The aim of organisations offering such mortgages is to try to rectify some of the damage already done to the environment and prevent it from getting worse. The damage is likely to be the result of, for example, global warming or deforestation.
  In the UK, homes are one of the largest emitters of carbon dioxide gas, which is a significant contributor to global warming. This area of the market is very small, the main providers being the Ecology Building Society, the Norwich & Peterborough Building Society, and the Co-operative Bank.

How they work:
The Ecology Building Society finances projects which conventional lenders may not consider. The Ecology lends primarily on two types of property:

1. Run down ruins which require renovation; &
2. New homes (self-build projects) which give an ecological payback.

Both types of property will be assessed on their environmental impact and any eco-friendly features to increase energy efficiency before an application for finance is accepted. If it is felt that a project is not ecologically sound, then it will be turned down.

The Norwich & Peterborough Building Society offers a green and brown mortgage.

For every mortgage given, eight new trees will be planted, every year for the first five years. The purpose of this is to make the house 'carbon neutral.' This means that the emissions from the property are offset against the rate of carbon absorbed by the new trees. After the initial five years, customers who wish to continue with the scheme can do so by paying Future Forests £4 for a new tree.

Future Forests are an environmental group who, work to offset the damage done to the environment by businesses and individuals. They are responsible for planting the trees, they also oversee the project and develop carbon management programmes. The aim is to create forests in East Anglia and Lincolnshire, which result from borrowers taking out a green mortgage.

The N & P offer two green mortgage deals:

1. For brand new homes, the Standard Assessment Procedure (SAP) rating must be 80 or more which relates to good energy efficiency; &

2. For existing properties, the N & P offer a free energy survey and £500 to be used for home improvements.

The brown mortgage is for borrowers looking to renovate or convert an empty property. The N & P will allow borrowers up to 85% of the value of the purchase price before its been converted and helps with financing the renovations. Borrowers also get a free energy survey.

The Co-operative Bank is the only high street bank that has a strict ethical policy. They will not do business with organisations or businesses that damage the environment. Examples are companies that cause repeated damage to the environment, companies that manufacture unnatural chemicals, which contribute to ozone depletion, or the unsustainable harvest of natural resources such as timber clearance.

For every mortgage granted, the Co-operative will make an annual payment to Climate Care, (for the duration of the mortgage,) an organisation dedicated to solving the problem of global warming. Climate Care achieve this is by reforestation, which also helps improve important world wildlife habitats in the world. The first project is in the Kibale Forest in Uganda. The forest has the highest population of primates along with 300 species of birds and 140 species of butterflies. The project also creates employment for villagers from the surrounding areas.

The mortgages have two ecological attributes:

1. They are committed to eliminating or absorbing 20% of carbon dioxide emitted from household gas and electricity use; &

2. By providing a free Home Energy Rating, as part of the valuation. This gives details on how energy efficient a house is and how much money can be saved by using energy saving measures.

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