In the wake of the banking Royal Commission, and with the widely reported Westpac bank issues and change of key leadership late last year still leading much of the recent news headlines, a growing number of increasingly discerning potential borrowers have more than the usual questions for a potential lender.
As well as utilising the knowledge of a professional mortgage broker to shop around for the best possible interest rates and home loan terms, more and more people are being increasingly mindful about their choice of financial advisers – including everything from big banks to insurance brokers and financial planners.
To avoid doing business with companies that may be seen as unethical, doing research on financial institutions and the corporations they are linked to is of greater importance.
Choosing an Ethical Lender for Your Mortgage
When it comes to choosing the ideal lender to approve your next mortgage, talking to a professional mortgage broker about finding lenders that meet your criteria about ethical investment is something that can add an extra dimension of pleasure to your property investment-related decisions.
Be clear on what matters to you and, by making your beliefs known to your home loan specialist, they can talk to you about what range of lenders best suit your needs.
Interest rates and other issues are obviously still important but, by balancing what is most important to you and your ideals, with the right knowledge up your sleeve, you can shop around for a home loan that does match your expectations.
Of course, just how flexible your home loan options are also has a lot to do with your own credit rating. If your credit rating is clean and you tick all the necessary boxes regarding steady income and proof of earnings, you have more choice available to you – something that does make choosing an ethical financial institution to do business with more realistic.
Plan for Your Mortgage Application
Repaying a mortgage is a long-term commitment, so if your values really are a vital part of your home loan application, it is more critical than ever to work on your own savings track record and credit score, in order to be appealing to a wider range of lenders.
This is important because if your financial history is chequered, even the very best mortgage broker will be more limited in their ability to find you a broad array of potential lenders. By working on ensuring you present as a positive choice for a lender to consider, you can let your values lead your decision-making, rather than just your circumstances.
How to Avoid the ‘Bad Guys’
As more and more Australians commit to more sustainable choices – covering everything from recycling, to catching public transport and regularly supporting charities – seeking out ethical banking is about choosing to do business with banks and financial institutions that do not invest in trade, or have any exposure to the following sectors:
• Fossil fuels, coal mining, or any environmentally-harmful mining of precious minerals
• Weapons – including military arms and guns
• Environmental deforestation
• Abuse of human rights
• Pornography or sexual slavery
• Cruelty of animals
Several Australian banking institutions have been recognised as being more ethically minded that others. Conversely, others have been singled out as being ethically irresponsible.
To learn more about your potential lender, visit the Responsible Investment Association Australia website, which features a member register (https://responsibleinvestment.org/directory/).
It’s important to note that not every ethical financial institution will be listed as a member but it is a good starting point. Visiting the list shown on Market Force’s website, list banks that invest in fossil fuels or are owned by larger companies linked to fossil investment. (https://www.marketforces.org.au/info/compare-bank-table/#table)
For more information about how to find the right mortgage or loan for your needs, talk to one of our home loan professionals at Lending Specialists today.