fbpx
PaymentsJournal
SUBSCRIBE
  • Analysts Coverage
  • Truth In Data
  • Podcasts
  • Videos
  • Industry Opinions
  • COVID-19
  • News
  • Resources
No Result
View All Result
PaymentsJournal
  • Analysts Coverage
  • Truth In Data
  • Podcasts
  • Videos
  • Industry Opinions
  • COVID-19
  • News
  • Resources
No Result
View All Result
PaymentsJournal
No Result
View All Result

The Low Down On Sustainable Mortgages

Cassie Warrington by Cassie Warrington
September 4, 2018
in Credit, Industry Opinions
0
mortgage

mortgage

5
SHARES
0
VIEWS
Share on FacebookShare on TwitterShare on LinkedIn

On the face of it, mortgages are a way of financing the purchase or improvement of your home. But the process of acquiring money shouldn’t be a means to an end – we need to look to the future. What if mortgages could actually help to create a sustainable future for all of us? Is there such thing as ethical lending? Sustainable and “energy efficient” mortgages (EEM) are about how the money is invested, and also about lending money to customers who are looking to buy or improve a property in an eco-friendly way.

Sustainable mortgages – the concept

Sustainable mortgages isn’t a new fandangled hipster idea, they have been about since the 1980s. Some lenders seem to have the idea more grounded than others however, and it has taken a long while for banks and credit unions to start taking them seriously. In the past, customers have been offered some shady benefits including printing your financial statements on recycled paper, and planting trees on your behalf. Citibank and Bank of America have even offered $500-$1000 off of closing costs, but it’s not much of an incentive in the great scheme of things.  Planting a woodland is a lovely idea, but customers are more shrewd than that and they want to know that the mortgage provider is investing money wisely, and not into arms dealing, drugs or warfare. They want to know that the lender is trying to make a difference to the generations to come.

Borrowing for green purposes

Sustainable mortgages also include lending money to customers that are building or improving a property using green methods. Some lenders are offering good add-on mortgage deals for customers that are making improvements to their property in order to become more energy efficient and green. This includes things like installing solar panels, or renewable energy sources, and putting in better insulation. There are also specific mortgage deals offered for restoration of derelict properties, self-builds, alternative tenures such as cohousing, and building a property using green methods such as cob, or straw bales. These “away from the norm” projects aren’t radical, but they are one small step to changing the concept of providing sustainable housing using eco-friendly materials that aren’t damaging the planet. The interest rate of these type of mortgages is often linked to ecological impact. How much money you actually pay depends directly on the ecological credibility of your project.

Cutting carbon emissions is one of the the main concerns for housing developers that are considering the environment. Let us consider that a staggering 71% of the electricity consumed in America is due to buildings – they produce 38% of greenhouse emissions. Green building practices both for existing homeowners and architects and builders are extremely important. The current government guidelines on EEM lending is the lesser of 115% of the median value of a dwelling, or 5% of the value of the property. This figure is sadly just a drop in the ocean if you want to make substantial changes to your house, such as installing geothermal heating, which can cost around $40,000.

Ethical Money Investment

When you’re purchasing a home, it is always worth asking a mortgage provider exactly what their approach to sustainable lending is. A sustainable mortgage should be one where the lender invests the money wisely, in projects that are going to help people in the future. Don’t forget that the interest that you are paying goes straight into the bank’s profits – that money could be used for good. A survey done by Callan of 84 banks, credit unions and institutional funds found that only 37% of them took into account social, and environmental factors into account when they invested their money (source:US News). Your best bet is to look for a lender or bank that is a Certified B Corporation. This means that they meet national set standards about the way they run their business and what they do with their money. There are 2,300 of these type of corporations worldwide, and the number is growing. The certificate has to be renewed every year, to prove that they are accountable and lending responsibly. A responsible EEM or sustainable mortgage lender should be completely committed to social and environmental values.

Sustainable mortgages are becoming more commonplace, as we are thinking more about looking after the world we live in. It might be a small drop in a big financial ocean, but a sustainable mortgage can be a ripple that turns into a wave.

Tags: Loans
5
SHARES
0
VIEWS
Share on FacebookShare on TwitterShare on LinkedIn

    Analyst Coverage, Payments Data, and News Delivered Daily
    Sign up for the PaymentsJournal Newsletter to get exclusive insight and data from Mercator Advisory Group analysts and industry professionals.

    Must Reads

    Embedded Finance: Digital  Innovation in the Cloud

    Embedded Finance: Digital Innovation in the Cloud

    August 16, 2022
    How Payments Integration Can Revolutionize Accounts Receivable

    How Payments Integration Can Revolutionize Accounts Receivable

    August 15, 2022
    Fed Survey Finds Access to Faster Payments Important to Most Businesses

    How to Ensure Accurate, Efficient Payments Amidst Economic Uncertainty

    August 12, 2022
    eCommerce Payments Fraud money mules

    Money Mules, You Are Already Have Them – Now What?

    August 11, 2022
    Why Banks and Credit Unions Need to Adopt Real-Time Payments Now

    Why Banks and Credit Unions Need to Adopt Real-Time Payments Now

    August 10, 2022
    Making Sense of Online Identity

    Making Sense of Online Identity

    August 9, 2022
    Account Takeover Fraud Is Getting More Sophisticated. How Can We Beat It?

    How to Protect Consumers from Account Takeover Fraud

    August 8, 2022
    Technical Challenge or Business Enabler? Seizing the Opportunity of PCI DSS Compliance

    PCI DSS v4.0 Compliance: Raising Your Script Security Awareness

    August 5, 2022

    • Advertise With Us
    • About Us
    • Terms of Use
    • Privacy Policy
    • Subscribe
    ADVERTISEMENT
    • Analysts Coverage
    • Truth In Data
    • Podcasts
    • Videos
    • Industry Opinions
    • COVID-19
    • News
    • Resources

    © 2022 PaymentsJournal.com

    • Analysts Coverage
    • Truth In Data
    • Podcasts
    • Industry Opinions
    • Faster Payments
    • News
    • Jobs
    • Events
    No Result
    View All Result

      Download the complimentary eBook - The power of today’s market‑ready AI to reduce transaction fraud