Tuesday, August 31, 2010

Officially in debt

One of my aims through this whole building process has been to be up front about money matters. Today I specifically want to talk about mortgages. When I'm at my other computer, where all the spreadsheets are (!), I'll write about money, or specifically, how much money various aspects of the build are costing us.

We are soon to be officially in debt. I suppose to many people, it's incredible that we have managed to get this far without borrowing. I guess it is. We'd saved quite a bit between us and we live a pretty modest lifestyle. We're incredibly privileged to have skills that are well paid.

Our loan is coming from MECU: a credit union (see www.mecu.com.au). We choose to use credit unions rather than banks because they fit better with our broader ethos about how to live:
  • Profit is not their primary reason for existence.
  • They are more accountable to their members.
  • They often tend to be more socially and environmentally progressive.

From a consumer perspective, they tend to be less punitive, offer competitive rates and to have lower fees. Ours also offers options such as:
  • an 'ecopause' (where we can take a break from repayments to assist with the purchase of energy and /or water saving devices such as rainwater tanks, solar or grey water system)
  • a 'family repayment pause' when one income earner is on maternity leave.
Of the six or so credit unions we considered, MECU clearly fit best with our values and needs.

Of course, all money and all financial decisions are ultimately part of the global financial system. We are under no illusions that our individual choices will make a difference. Nevertheless, it seems to us to be a contradiction to borrow from a big bank - which has its tentacles in all manner of unsustainable and unethical industries around the globe - to build a 'sustainable house'.

Some people's financial circumstances mean that they really, really need to pursue a lender that can undercut others by point something of a percent. But many people are not so greatly constrained.

Arguably, for these people, including ethical criteria in selecting a lender should be seen in the same light as any other cost:benefit analysis aspect of sustainable building. I'm not convinced that double glazing paid for with a loan from the ANZ bank is better for the environment than single glazing paid for via a loan from MECU.

(Important note here, I have absolutely no idea what the current difference might be in the ultimate financial cost of loans from these two institutions. MECU might even be cheaper!)

The profits that our loan yields to our lender will be significant. These profits can be used wisely and accountably, or they can be spent further plundering our planet's scarce resources. We know which we prefer.

A lot of people have never thought about these issues, and I don't blame them one bit. It's not in brokers' interests to flag them, the big banks are full of greenwash, and credit unions just don't have the profile. I hope this provides some food for thought for those of you who are yet to find a pot of money to build your sustainable home.


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