We live at a time in history when a virtually unlimited stream of information is available to anyone with access to the internet. As a result of knowing so much about so many things, we have also become a world that is more ethically aware. People are more socially conscious; they are more thoughtful about how they spend their money; they are careful about those they do business with from an ethical standpoint.
All of this leads to the question of ethical banking. What is it? And if you’re looking to buy a house, does ethical banking apply to mortgage lending? The answers to both questions will be answered in this article. Hopefully what you learn will provide the guidance you are looking for as you search out a good mortgage deal.
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A Definition of Ethical Banking
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You will not find ethical banking clearly defined in the dictionary. So for our definition, we turn to the National Federation of Self-Employed and Small Businesses (FSB). They define ethical banking as banking practices that “have a positive environmental and social impact.”
A bank that follows ethical banking practices is very careful about how it invests its money. It stays away from opportunities that are bad for the environment. It doesn’t partner with organisations engaging in behaviour that is not in the best interests of society. This can play out in lots of different ways.
You could have a commercial bank that refuses to invest in any projects that benefit nuclear power. You could have another financial institution that refuses to lend to an organisation proven to practice discrimination. The point is that an ethical banking institution is socially and environmentally conscious in its decision-making.
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Ethics and Mortgage Lending
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Based on the FSB definition, it is reasonable to say that ethics also apply to mortgage lending. Whether a lender is a retail bank, a commercial bank, or a specialist private lender, decisions relating to ethical questions do play into how that lender does business. That’s good news to home buyers who want to make sure their mortgages come from ethical lenders.
To that end, working with an ethical mortgage brokerage helps the home buyer find the best deal from a lender that can be trusted to be socially and environmentally conscious. Those lenders are absolutely out there. You just have to know how to look for them and where to find them. That’s where a mortgage broker becomes so indispensable.
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What Mortgage Brokers Do
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A mortgage broker in the UK is a financial adviser with a special expertise in mortgage lending. It is his or her job to help clients find the right mortgage deals for their individual circumstances. How they go about it depends on the way their brokerage is set up.
Some brokers are tied to just one financial institution. They can only represent that institution’s products. Other brokers represent several different institutions simultaneously. They are also limited to the products of those institutions they represent.
A completely independent mortgage broker is the home buyer’s best bet most of the time. Being fully independent gives a broker access to virtually every product on the market. He or she is free to look anywhere and everywhere to find the right deal. And more often than not, fully independent brokers have access to deals made available exclusively to them.
When you throw all of this together in an ethical mortgage brokerage, you end up with fully independent brokers who not only have access to all kinds of deals, but also who specialise in finding socially and environmentally responsible deals. They give buyers the opportunity to work with an ethical lender.
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A Lender of Your Choosing
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Ethical banking was virtually unheard of just a couple of decades ago. But thanks to a more socially and environmentally conscious public, financial institutions are taking their own responsibilities to society and the environment more seriously. If ethical banking is something you are concerned about, you can take confidence in the fact that growing numbers of financial institutions are redefining themselves by adhering to certain ethics.
Ultimately, you will work with the lender of your choosing when it comes time to get a mortgage. It is probably a good idea to consider using a mortgage broker if you are committed to only considering financial institutions that align with your ethical standards.
Just like there are ethical mortgage brokerages, there are also ethical lenders. Some are banks, others are building societies, and still others are private lenders. They offer very competitive mortgage deals designed to help you get that house you want. Now it’s up to you and your mortgage broker to find the deal that is best for you in light of your financial goals.
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