Last updated 7 January 2019
When it comes to being responsible, who you borrow from is as important as who you lend to.
The good news is that if you want a mortgage from a more ethical lender there are several choices.
The even better news is that they cover everyone from mainstream borrowers to those struggling to get on the property ladder or those wanting to build something more interesting.
There are four good picks below.
If you’re borrowing for a project that is a little different, Ecology Building Society specialises in properties outside the mainstream. These include self-build mortgages for non-standard but energy efficient construction, energy efficient renovations, moorings for houseboats and loans for buying woodland.
With a standard variable rate of 4.65 per cent, Ecology won’t compare with the cheapest rates on the market, but mortgages for non-standard properties are typically more expensive than the norm. The good thing is, once your property is complete, the rate is typically discounted according to the energy savings you are making.
So if you’re building a wattle and daub house or want to make a listed building more energy efficient, Ecology will consider your project without taking what it calls a ‘tick box’ approach.
The mortgages are funded through members’ savings accounts.
Good For: Selfbuilders, energy improvers
Two-year fix at 3.45 per cent with a five per cent deposit/2.75 per cent with a 25 per cent deposit
Smaller building societies are traditionally more able to look at customers on an individual basis, and Ipswich is proud of its Suffolk roots. As well as promising to consider each customer individually, it works with housing organisations across Suffolk to help address more systemic homelessness issues. The group also has a focus on financial education in schools.
Ipswich mortgages are particularly good for those with lower deposits, even if you only have 5 per cent of the property value. Deals as of 7 January 2019 include a two-year fix at 3.45 per cent for 95 per cent LTV or 2.75 per cent for 75 per cent LTV as well as 3.14 per cent for two year variable 95 per cent LTV and 2.5 per cent for 75 per cent LTV. Deals come with £1,000 fees, however, and £199 of this is a non-refundable application fee.
Good for: First-time buyers with small deposits
Two-year tracker at 1.44 per cent for those with 40 per cent equity in their home (£999 fee)
Britain’s biggest mutual uses its size to offer good-value products for more standard borrowers. The mutual is rated highly by ethical commentators, including Ethical Consumer, and offers higher interest rates to its customers, so you may do well out of its savings accounts too.
For those with more equity in their home, Nationwide’s rates are competitive, including the 1.44 per cent rate above. If you want total peace of mind, it offers a ten year fix at 2.69 per cent. Most of its products come with a £999 fee.
Good for: Borrowers with lots of equity in their homes
Five-year fixed rate at 2.59 per cent for remortgaging at 85 per cent loan to value (£999 fee, existing customers)
Despite its highly publicised woes in recent years, the Co-op continues to reiterate that it is an ethical bank, despite hedge fund ownership. To celebrate 25 years of its ethical policy it is currently donating £25 to youth homelessness charity Centrepoint for every mortgage taken out. For remortgaging it gives free standard conveyancing and legal fees.
Good for: Fee-free remortgages
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