Green mortgages are mortgages that are offered to individuals purchasing energy-efficient homes. The individual is offered a reward for purchasing an energy-efficient property in the form of a lower rate of interest or cash-back on green mortgages.
How do I get a green mortgage?
All lenders have different criteria for green mortgages however the property will need to meet a minimum level of energy efficiency (usually an EPC rating of A or B). Some lenders such as The Ecology Building Society, offers a discount on the mortgage interest rate based on the improvement made in your property’s EPC rating available for renovations, conversions, and new self-build properties. This discount is then applied for the full term of your mortgage. Green mortgages are more commonly available for new-build homes. You can check if a property has an EPC using the government website.
Green mortgages have been around since 2018 and are growing in popularity. Banks are moving towards more sustainable lending and home buyers are looking to live more environmentally-friendly lifestyles.
There are three main types of green mortgage:
- offer a lower rate of interest for people who buy energy-efficient properties
- standard mortgages that offer cash back to people who buy energy-efficient properties
- offer a cheaper rate or cash back when people make green home improvements
If you currently have a mortgage with a bank that offers green mortgages then this could be a great way to access more money to fund home improvements.
“Green mortgages are highly likely to become more popular in the next few years as consumers and lenders take a great interest in climate change and sustainability. If the recent increase in energy prices are anything to go buy, we all need to be considering the energy efficiency of our homes and working on improving them”Suzanne Bungard, Resolve Financial Solutions.
The Climate Change Committee (CCC) says 19 million of the UK’s 29 million homes have an EPC rating of below C. To meet its emissions target by 2050, the CCC says the government should ensure all homes have a rating of at least C from 2028. We believe that mortgage lenders could play a key role in the government hitting this target.
If you would like to find out more about green mortgages and whether you qualify, then please get in touch.
*Please note: Your home maybe repossessed if you do not keep up repayments on your mortgage.