Going green with mortgages for professionals
Environmentalism has fast-become one of the nations prime concerns.
But as green-thinking has become more prevalent worldwide, what has the mortgage market done to tap into this new cultural phenomenon?
Ethical Banking
According to mortgage firm mform's recently introduced "Green Leaf" criteria, 39 mortgage lenders qualify as environmentally friendly under the Green Leaf scheme - equal to 48 per cent of the market share.
But while this will no doubt reassure borrowers, the Council of Mortgage Lenders indicates that the number of mortgage products available that are drawn from eco-friendly source and directly contribute to ecology projects and charities, are few and far between.
The problem is, products provided by lenders such as the Co-operative Bank and the Norwich & Peterborough and Ecology building societies are still part of a very "niche" market.
"The market is still very rate-driven," commented a spokesperson for Norwich & Peterborough. "At the moment it's a fact that it's all about rates and less about ethics."
Mortgages on green homes
But with the government pledging to make all homes carbon neutral by 2016, opting for a more competitive product on an eco-friendly product could serve as an alternative.
Andrew Pitt, Waterwise East coordinator, noted: "Research conducted by a variety of organisations has shown that a majority of homebuyers would opt for, and are willing to pay more for an eco-home."
Unfortunately, this also gives rise to lending problems.
"Mortgages are granted on the basis that the property has a very long life ahead; lenders usually expect the vendor to put a larger deposit down where the life span is in question," said a spokesperson for Lansdown place.
"This potentially applies to homes built with eco-friendly materials," he added.
Long-term compromise
Meanwhile, on the plus side, the green mortgage market enjoyed a resurgence last year, marketing manager for Ecology building society, Jenny Irwin, has revealed.
"Ecology Building Society had a phenomenal year in 2007. Mortgage lending for the year was the highest on record and we doubled our gross lending compared with 2006."
Indeed, Ecology has even neatly sidestepped the credit crunch as a consequence of its lending and borrowing policy.
"We are a mutual building society and use our savers' investments to fund mortgage lending, so we do not need to borrow funds from external sources. As such we have not been affected by the credit crunch," added Ms Irwin.
But even if rates aren't competitive, the truly green homeowner could make up the difference on money saved through green improvements.
According to John Slaughter of the Home Builder's Federation (HBF), the addition of Energy Performance Certificates (EPC) to Home Information Packs (Hips) could also increase the saleability of a homeowner's property.
He said: "It will actually raise awareness of the benefits of good levels of energy efficiency and insulation would have - not just running costs but [for the] comfort of the house and so forth."
Taking a holistic approach to the issue of green mortgages could therefore reap dividends for those borrowers willing to do their homework.
Mortgages for Professionals is a specialist mortgage broker offering a whole-of-market choice of all UK lenders. We provide a service dedicated to individuals with professional qualifications and high projected earnings – from doctors and dentists, to accountants and engineers.
But as green-thinking has become more prevalent worldwide, what has the mortgage market done to tap into this new cultural phenomenon?
Ethical Banking
According to mortgage firm mform's recently introduced "Green Leaf" criteria, 39 mortgage lenders qualify as environmentally friendly under the Green Leaf scheme - equal to 48 per cent of the market share.
But while this will no doubt reassure borrowers, the Council of Mortgage Lenders indicates that the number of mortgage products available that are drawn from eco-friendly source and directly contribute to ecology projects and charities, are few and far between.
The problem is, products provided by lenders such as the Co-operative Bank and the Norwich & Peterborough and Ecology building societies are still part of a very "niche" market.
"The market is still very rate-driven," commented a spokesperson for Norwich & Peterborough. "At the moment it's a fact that it's all about rates and less about ethics."
Mortgages on green homes
But with the government pledging to make all homes carbon neutral by 2016, opting for a more competitive product on an eco-friendly product could serve as an alternative.
Andrew Pitt, Waterwise East coordinator, noted: "Research conducted by a variety of organisations has shown that a majority of homebuyers would opt for, and are willing to pay more for an eco-home."
Unfortunately, this also gives rise to lending problems.
"Mortgages are granted on the basis that the property has a very long life ahead; lenders usually expect the vendor to put a larger deposit down where the life span is in question," said a spokesperson for Lansdown place.
"This potentially applies to homes built with eco-friendly materials," he added.
Long-term compromise
Meanwhile, on the plus side, the green mortgage market enjoyed a resurgence last year, marketing manager for Ecology building society, Jenny Irwin, has revealed.
"Ecology Building Society had a phenomenal year in 2007. Mortgage lending for the year was the highest on record and we doubled our gross lending compared with 2006."
Indeed, Ecology has even neatly sidestepped the credit crunch as a consequence of its lending and borrowing policy.
"We are a mutual building society and use our savers' investments to fund mortgage lending, so we do not need to borrow funds from external sources. As such we have not been affected by the credit crunch," added Ms Irwin.
But even if rates aren't competitive, the truly green homeowner could make up the difference on money saved through green improvements.
According to John Slaughter of the Home Builder's Federation (HBF), the addition of Energy Performance Certificates (EPC) to Home Information Packs (Hips) could also increase the saleability of a homeowner's property.
He said: "It will actually raise awareness of the benefits of good levels of energy efficiency and insulation would have - not just running costs but [for the] comfort of the house and so forth."
Taking a holistic approach to the issue of green mortgages could therefore reap dividends for those borrowers willing to do their homework.
Mortgages for Professionals is a specialist mortgage broker offering a whole-of-market choice of all UK lenders. We provide a service dedicated to individuals with professional qualifications and high projected earnings – from doctors and dentists, to accountants and engineers.
