Last updated: July 2016
Finding an Ethical Mortgage
Mortgages are usually the biggest financial ‘product’ that most people ‘buy’. As such they can be particularly lucrative for the banking industry – giving them ever more resources to invest in problem sectors around the world such as the fossil fuel industry.
You can read more about the big five banks and their controversial investments in our guide to current accounts.
The greenest mortgage
There is now only one specifically green mortgage available on the market, which is from the Ecology Building Society.
The Ecology Building Society provides mortgages which promote sustainable housing and communities. This might be through energy-efficient housing, ecological renovation of run-down properties, small-scale and ecological enterprises or low-impact lifestyles.
Its innovative C-Change scheme offers home-owners discounts off their mortgage rates for energy-efficient homes. There are four levels of discount off a standard variable mortgage ranging from 0.50% to 1.25%. The level of discount offered depends on the energy standard of the home, so the more energy efficient the home is, the bigger the saving you can make on your mortgage.
It also has mortgages for energy-saving improvements in existing homes. These might include installing insulation or renewable generation technologies.
Specialists in super-efficient buildings
The Ecology Building Society also specialises in lending for projects that meet the Passivhaus standard. This is a low energy construction standard that exceeds current building regulations. Commonly used throughout Europe, the design of Passivhaus buildings ensure they use around 90% less energy for heating than the average house.
The Passivhaus standard aims to reduce space heating requirements to such a low level that a conventional heating system is no longer needed. Houses built to this standard also often include insulation up to 300mm thick and triple glazing.
Building to the Passivhaus standard can be more expensive, but the move could save you around £900 a year on energy bills as well reducing carbon emissions to zero, and you would qualify for a discount rate from the Ecology Building Society. 
Other more ethical options
Others in the mutual sector also provide a better option that the big five, in terms of ethics.
Building Societies are seen as a more ethical option due to the fact they lend mainly in the housing market and don't invest in fossil fuels and other unethical sectors.
All the mutuals featured on the table above (including the EBS) pick up an additional mark in our scoring system for company ethos due to their democratic structures. They also lend to those purchasing all types of homes, and not just environmental alternatives.
It is possible to switch mortgage provider in the middle of a mortgage period. Normally this is done for financial reasons, but could be done for ethical reasons too. It may involve up-front costs such as having a property surveyed again.
You should always seek professional advice before you take on a new mortgage or make a decision to switch. A good place to find an independent mortgage adviser is unbiased.co.uk.
Whether switching, or as a first time buyer, ordinary repayment mortgages are always best from an ethical point of view. Interest-only or ‘endowment’ mortgages, of which there has been much mis-selling in previous years and which rely on stock market investments, will always be problematic ethically – as well as less straightforward financially.
Company behind the brand
Santander is also involved in a number of ‘dodgy deals’ including mountain-top-removal coal mining in the United States, the Punta Catalina-Hatillo coal power project in the Dominican Republic and the Rio Madeira dams in Brazil.
According to the ‘Undermining Our Future’ report, Santander gave $14.113 billion in loans and underwriting to selected fossil fuel companies compared to $7.921 billion to selected renewable energy projects during 2009-2014.
Want to know more?
If you want to find out detailed information about a company and more about its ethical rating, then click on a brand name in the Score table.
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This product guide is part of the special report into ethical money. See what else is in the report.