We show you the most efficient way to be green with your mortgage, at a cost of just £42 more than the best mortgage on the market.
In Why You Shouldn't Buy Green Financial Products, I explained that I had yet to see a green financial product that was efficiently green.
Although I acknowledged that I had not investigated all of them, by any means, I have so far consistently found that you can do more to be green by getting a top of the market 'brown' product, where you save more money. You then donate some of the savings to your favourite green cause. This way, you can contribute more to reduce the effect of climate change and save more money.
Now, with the help of Fool researcher Sophie Jones, I have looked into some more green products, to see if I could find one that works. There has to be at least one good one, I thought!
There are loads of green products out there, from credit cards to savings accounts. Certainly too many to review here. To keep this from turning into an epic, I'll just focus on the results of the green mortgages we looked into.
Norwich & Peterborough
I've already explained about Norwich & Peterborough's mortgage in Why You Shouldn't Buy Green Financial Products. The verdict was not good.
Giraffe
Giraffe offsets 5.5 tonnes (what it reckons to be the average home's carbon emissions) for each year of the introductory period.
However, I don't even need to consult The Fool's comparison tables to see that its products are incredibly inefficient. The best carbon-offsetting deal it offers is a three year-fixed rate of 6.08% per year and a £1,000 arrangement fee. This is way off the top of the table.
Putting some figures into The Carbon Neutral Company's website, it claims I could offset 5.5 tonnes of carbon for as little as £41 per year, or £123 over three years.
So, you'd be vastly better off, most likely to the tune of thousands of pounds, if you compared standard two- or five-year fixes from the whole market to find a much better deal. You then have a huge amount of savings which you could contribute to green causes if you wished.
The Co-operative Bank
The Co-operative Bank says that all its mortgages are green, which makes this offering an awful lot more difficult to evaluate in terms of greenness.
I tried six different searches in our mortgage search engine to see how competitive this bank is. It came pretty close to the top on several occasions, and seemed to do particularly well with short-term fixes. Its best value deal was only £280 below the top-of-the-table product over two years, including all charges and fees.
This doesn't sound like much, so you'd think the Co-op doesn't need to give a great deal to green causes to make this worthwhile.
I asked The Co-operative Bank for details about how much they donate per mortgage, because I could find no details on its website. Unfortunately, it was unable to get back to me on time with the details.
So I asked James Cotton of mortgage brokers London & Country, who said that The Co-operative does not have fixed rules about how much it donates.
This means I had to run some rough figures of my own to estimate how much they contribute to green causes. From figures I've been able to piece together from various sources, I estimate that The Co-operative donates about £8 to £15 per mortgage per year to green causes. That's nothing!
One thing might save the bank's green offering though: with some of its products coming close to the top in my tests, it's possible that with the right profile you might find the Co-op is at the top of the table for you. It's a long shot, but it's possible!
Conclusion
What we learn from this, looking at the best of the green deals, is that the most mortgage lenders are going to contribute is about £40 per year. (£41 for Giraffe and £40 for Norwich & Peterborough, which donates £200-worth over five years.)
So you can have a clear conscience by turning your brown mortgage into a greener mortgage. You simply get the best deal available, saving hundreds or thousands of pounds, and then contribute at least £42 or more per year to your favourite green cause.
> Rather than getting a green mortgage product, get the best brown one for you through The Motley Fool's Mortgage Service, where you can compare the whole market, and we'll plant 50 trees for you!
>The Fixed-Rate Mortgage Gamble