What Are Green Mortgages?

Fixed rate, flexible or tracker? Mortgages can be a minefield of jargon and complicated decisions - particularly in this rather unsettled current property market climate. However, one thing you should be sure of is the ethical stance of your mortgage lender.

With more and more of us caring where our money is being placed, a number of green options have become available to help you make environmentally friendly and ethically sound financial investments. And where better to start than with probably your biggest investment of all, your mortgage?

As energy efficiency becomes a more central part of the buying and selling process with the introduction of Home Information Packs and Energy Performance Certificates, you can also do your bit by choosing a greener mortgage. There are a growing number of offerings on the mortgage market which will help you make your home energy efficient and put something back into the environment.

Here, we outline some of the most popular options. As with all financial offers, do check with individual lenders that these offers are still available, or what other green options are on offer.

Co Operative Bank

The Co Op Bank is probably the best known for its ethical approach to lending and dealings. Their mortgages include options that will offset the carbon emissions generated in your home for the lifetime of your mortgage, based on an estimated rate of energy consumption. They estimate that their offsetting campaign has reduced the average household carbon footprint for their customers by around a quarter.

Their Ethical Policy is also one of the most robust on the market, and has shaped and influenced the policies of other lenders. This means that you know that your money won't be funding any activities that are unethical, or particularly bad for the environment.

Norwich and Peterborough Building Society

This is another lender whose stance on the environment helps to shape its lending practices. They will only lend mortgages to customers whose prospective properties meet a predetermined standard in energy efficiency, usually new houses built to housing efficiency standards, or to customers who want to make improvements to increase the energy efficiency of the property. Additionally, for every mortgage taken out, the building society will plant 40 new trees in East Anglia and Peterborough.

Ecology Building Society

Mortgages from the Ecology Building Society are awarded to the property rather than the individual, judged on whether the building is of environmental benefit or interest. The mortgage is particularly appropriate for renovation or building projects that reuse or use recycled materials. The Ecology Building Society was the first green lender, and recently reported a 100% rise in the number of mortgages being offered on the previous year.

Green Mortgages: Still Niche, But a Growing Market

The number of green options on the market is still relatively limited - but it is growing, and this looks to be a continued trend following emphasis being placed on green mortgage options by Gordon Brown. Brown has spoken to the banking community about green offerings, and several building societies are preparing to launch green products, including the UK's biggest mortgage lender, Halifax, who launched two green products at the end of 2007.