Guide to green mortgages

What are green mortgages and could you save money by taking one out? We explain everything you need to know about green mortgages in this article, from how they work, what the benefits are and how to find out if you’re eligible to get one.

What are green mortgages?

In a nutshell, green mortgages reward you for buying or owning a home with a high energy efficiency rating or for making improvements to your home’s energy efficiency.

So, how do I know how energy efficient my house is?

Don’t worry if you don’t know how energy efficient your house is – it’s simple to find out. You’ll find this on your Energy Performance Certificate (EPC). The most energy efficient homes are rated A while the least energy efficient homes are rated G. However if you’re not sure where your EPC is you can check it here and if your home doesn’t have one or if the EPC has expired you can get a new one.  

Green mortgages: How do they work?

There are three main types of green mortgages:

• Firstly, some lenders offer cheaper rates if the property meets its energy efficiency criteria such as your home having an EPC rating of B or above
• While some lenders may offer you cashback when you take out one of its standard mortgages providing your home meets its energy efficiency criteria
• Lastly some green mortgages offer cashback or cheaper rates if you make energy efficiency improvements to your home

Is it likely that green mortgages will become more common?

It’s reasonable to assume that green mortgages will probably become more common in the future. This is because the Government has already announced it wants all UK properties to achieve an EPC rating of C or above by 2035, ‘where practical, cost-effective and affordable’. This aim is part of the government’s wider pledge to achieve net zero carbon emissions by 2050.

With green mortgages, lenders are supporting the government with this aim as they offer homeowners incentives to live in energy efficient homes and to make energy efficient improvements too.

What are the benefits of green mortgages?

So why should you take out a green mortgage? Well there are lots of potential benefits depending on your circumstances. These include:

• Saving on your mortgage. If your home has a high energy efficiency rating and this means you’re able to take out a green mortgage it could mean you’re able to access to get a lower rate on a mortgage than you would have been able to otherwise. If this is the case, it means you’ll pay less on your mortgage each month. And you might be eligible for cashback as well.
• Lower energy bills. If you make your home more energy efficient this means you’ll pay less on your energy bills. And with the cost energy hitting new, eye-watering highs this could make a big difference on how much you pay on your energy bills.
• Increasing the value of your home. Given the Government’s target for all properties to have achieved an EPC rating of at least C by 2035, homes that have a high energy efficiency rating are likely to become more sought-after by buyers in the years to come. And this could mean their value rises.

So can I get a green mortgage?

This depends. If you want to apply for a green mortgage that offers lower rates on homes with a high energy efficiency rating, you’ll need to meet the lender’s criteria on energy efficiency. But you don’t need to do the research on this yourself – we have a team of advisers who are experts in green mortgages who’ll explain all your options to you. And are you looking to remortgage? A green mortgage could be an option too, depending on your circumstances.

Also our expert advisers are here ready to help if you’re looking for cashback or lower rates on a mortgage because you’re planning to improve your home’s energy efficiency.

However, when you’re asking if you’re able to get a green mortgage, remember that just like when you apply for any mortgage you’ll still need to meet the lender’s standard mortgage lending criteria to be accepted.

Green mortgages: How we can help you

It might sound like there’s a lot to think about with green mortgages but just like anything, information is key. So whether you’re ready to take out a green mortgage or you’d just like to find out a bit more, get in touch with one of our advisers who’ll be able to answer all your questions and help guide you through the process.