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Green & Ethical Mortgages: A Guide to Alternative Property Lending

Once a quirky option for the staunch environmentalists, green and ethical living has become a hot topic over the last few years. As more of us recognise our social responsibility to the planet and our communities it seems only right that our choice of finances should also reflect our higher aspirations for green and better living.

So, what are green and ethical mortgages and can they offer more than just a ‘feel-good’ factor? We take a look at the mortgage markets

What is a ‘Green’ Mortgage?

There are several types of green mortgage but typically it constitutes a loan on a property which meets certain minimum criteria for energy efficiency.

In April 2018, Barclays became the first major UK high street lender to offer a Green Home Mortgage. The product is designed as an incentive for the purchase of homes that have an EPC rating of A or B. Offering lower interest rates than other similar mortgages, the mortgage is currently only available on new builds through certain developers but it is hoped that this will be extended to cover all major housebuilders by the end of 2018.

green mortgages

Green mortgages are applicable to any kind of property but generally require you to invest in energy efficiency. Image via PxHere.

As well as Barclays, there are several other smaller lenders in the UK that offer green mortgages to incentivise owners of existing properties to invest in energy efficient technology. These include the Norwich and Peterborough Building Society and The Ecological Building Society.

Another variation on the green mortgage is one which is designed to offer buyers the opportunity of making their investment ‘carbon neutral’. In these cases, the mortgage company pledges to plant a number of trees each year for a fixed term; the idea being that the carbon emissions of your home will be offset by your choice of mortgage.

These types of mortgage are more of a gimmick and there is some debate as to whether the action taken by the lender truly results in a ‘carbon neutral’ exchange.

Some lenders will also offer green mortgages which include additional capital to help homeowners to invest in energy efficiency improvements to their home.  In these instances, it is usually the property (rather than the person) who is being approved for the mortgage.

Another form of ‘green’ mortgage is one that is sourced from a lender whose corporate investment strategy does not include any forms of fossil fuel development.

In general, there are relatively few green mortgages available on the market and most of these are at a premium to other similar products. However, as more banks and building societies commit to sustainable financing then we can expect to see more of these kind of mortgages available at comparative costs.

What is an ‘Ethical’ Mortgage?

Ethical mortgages are different to green mortgages in that they are not linked to the house against which you are borrowing but are sourced from lenders who meet certain criteria when it comes to their own investment strategy.

ethical mortgages

Ethical mortgages tick boxes on many different core values. Image via Creative Commons Images.

Most commonly, ethical mortgages are only available from lenders who do not invest in unethical sectors (including fossil fuels). They are companies that approach investment for their customers based on co-operative values, sustainable housing and community projects and creating a culture that promotes ethical business relationships. Their own investment profile usually includes lending and donations towards projects such as reforestation, charities and climate change.

For this reason, mutual lending societies are the most common way to source an ethical mortgage.

The following building societies tend to score highly for their ethical lending:

  • Skipton Building Society
  • The Ecology Building Society
  • Nationwide Building Society
  • Leeds Building Society
  • Newcastle Building Society
  • Coventry Building Society

The traditional high street go-to for ethical lending, The Co-Operative, has been struggling over the last few years to maintain its profile in this area but are still a good source of responsible, ethical lending.

Choosing an Ethical or Green Mortgage

Before choosing any kind of financial product, particularly a mortgage, we would strongly recommend discussing your options with an Independent Financial Adviser (IFA).

alternative mortgages green and ethical

Whatever mortgage you are looking for, make sure it is the right one for you and the property you are buying. Image via Flickr.

It is important to thoroughly understand the terms of your borrowing, particularly with green mortgages as they may require you to make substantial renovations to your property to meet minimum energy efficiency requirements. Sometimes the cost of these upgrades can make borrowing unviable.

Again, it is important to point out that most green and ethical mortgages come at a premium to other forms of lending. A reputable IFA should be able to advise you on alternatives depending on your goals.

 

Here at Property Assistant, we work with both local and national IFAs that provide reliable and independent advice. Regulated by the Financial Conduct Authority, we can recommend the services of a suitable adviser to help discuss your needs for any form of home lending, whatever your needs.

Featured image via Public Domain Pictures.

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New Year, Better You: 2018 on a Budget

Want (or need) to start 2018 on a budget?

January is always a long month; after the expense and over-indulgence of Christmas and the New Year, most of us are looking ahead for the next pay cheque. However, austerity doesn’t have to be a necessity as we look to ways that you can save money in 2018. Maybe you can treat yourself to a big holiday on the savings or just build that nest egg you need for a deposit on a new home?

Here’s a few tips to help get 2018 on a budget:

Shop Online for Groceries

It may cost you a delivery fee of a few extra pounds but shopping online not only saves you time but it forces you to plan ahead and stops any impulse purchases. By planning family meals and buying only what you need, it is estimated that you could reduce food waste (and money) by up to 30%.

Shop Around for Financials

We all have what we believe to be fixed overheads like utilities, mobile bills, insurance and broadband. In a competitive market you will find that all of these bills could be reduced by shopping around. Use an online comparison tool to assess the benefits of switching suppliers for your gas, electricity, broadband and insurance. Set aside an afternoon to go through every account and commit to a change. The average family could see annual savings of over £1000 which will certainly help put 2018 on a budget.

2018 on budget

Don’t let bills eat into your finances, put 2018 on a budget. Image via Pixabay.

Check Your Council Tax Banding

Did you know that as many as a quarter of a million homes in the UK are paying the wrong rate of council tax?

In 1991, when the new council tax system was put in placed the Government engaged teams of local estate agents to put a value on every home in the UK. It was a big job and it needed doing to a very tight deadline; the result was that many homes were ‘valued’ without reasonable understanding of exactly what the house comprised of. A street with twenty terraced houses were all valued at the same banding, yet the agent wouldn’t be aware if the one in the middle was a two bedroom house and not a three.

To find out whether you could challenge your council tax, check our blog for further information.

Move Your Credit Card Balance

If you have amassed a large debt on your credit cards over Christmas then consider the zero interest credit cards available where you can transfer a balance. This is not a long-term solution but will save you money on interest charges whilst you pay off the balance.

2018 On a Budget

If you need to start 2018 on a budget because you are thinking of buying a new house, then you might want to check out our guide to improving your mortgage score.

For all things property related, PA:UK are your local, independent estate agents. We believe we see things differently and want to provide as much information for all our clients so they can make the best choices when it comes to their next home.

For more information, contact us today on 0118 912 2370.

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Are You Paying The Right Council Tax?

Did you know that as many as a quarter of a million homes in the UK are paying the wrong rate of council tax? But surely our council tax banding is based on accurate data and will be right?

Wrong.

In 1991, when the new council tax system was put in placed the Government engaged teams of local estate agents to put a value on every home in the UK. It was a big job and it needed doing to a very tight deadline; the result was that many homes were ‘valued’ without reasonable understanding of exactly what  the house comprised of. A street with twenty terraced houses were all valued at the same banding yet the agent wouldn’t be aware if the one in the middle was a two bedroom house and not a three; this was well before the age of Zoopla and the internet being for anything other than a dog pile of MSN entertainment news and tech nerds.

Save money

Your council tax band could be wrong which may mean a big refund. Image via PxHere.

The fact is that if your house hasn’t changed hands since 1991 and even if it has there could be an error in your banding. Fortunately, you can check online to see if this is the case before you challenge it with your local council.

How To Check Your Council Tax Banding

The easiest way to do this is to use the Governments own valuation office (Scottish Assessors Office for Scotland) to check what your neighbours are banded at and compare.

Before you challenge the council storm, you need to find out what your house was worth in 1991 when the council tax bands where determined.  Use Zoopla to find out your homes current value (or value at the last date of sale) and then, enter it into this calculator (provided by Nationwide) to determine what your house would have been worth at the time.

Providing there have been no changes in the size of the house (number of bedrooms etc.) then you should be able to assess what band your house should have fallen into using the table below:

 

BAND ENGLAND SCOTLAND
A under £40k under £27k
B £40,001 – £52,000 £27,001 – £35,000
C £52,001 – £68,000 £35,001 – £45,000
D £68,001 – £88,000 £45,001 – £58,000
E £88,001 – £120,000 £58,001 – £80,000
F £120,001 – £160,000 £80,001 – £106,000
G £160,001 – £320,000 £106,001 – £212,000
H over £320,000 Over £212,000

If you believe there has been an error in your banding then you can claim back the tax that has been overpaid for as long as you have been in the property….right back to 1993 when the tax came into force.

Do your calculations and then double check them before you send off that first letter to your council indicating that you believe there to have been an error. The last thing that you want is for your tax to be increased if you have miscalculated!

calculate your council tax bill

Make sure you do your calculations correctly to avoid a price hike instead of a reduction. Image via Pexels.

What do you stand to gain?

Well, the difference in bandings can be as much as £100-£400 per year so, if you have been at the property for ten years that’s a good £1000-£4000 you could be due. It’s worth half an hour of your time to find out.

 

Property Assistant is an independent estate agent based in Wokingham and providing property related services in the Thames Valley. From property sales to lettings and tailored property searches, we believe in an open and honest service for all our clients. If you’d like to find out more about our services then contact us today on 0118 912 2370.

Featured image via Flickr.