A green mortgage is a relatively new addition to the mortgage landscape, looking to attract buyers into purchasing energy-efficient homes. In this article, we’ll look at what a green mortgage is, who offers them, and how you could get one.
A growing number of lenders are looking at green mortgages as a way of enticing people into buying a more energy-efficient property that is better for the environment. It works the same way as a normal mortgage but with attractive benefits, such as getting a better interest rate or cashback. Most homes have an energy performance certificate (EPC) that showcases how energy-efficient they are, and green mortgages are offered on the basis of that EPC.
There are two main categories for green mortgages. The first is a mortgage that offers rewards for living in a home that is classed as energy-efficient, i.e., it has an EPC rating of A or B. The other offers rewards if you make improvements to your home that help it become more energy-efficient – e.g having solar panels installed or replacing your single-glazed windows with double-glazed.
It is in the bank and building societies’ best interest to offer incentives for this type of property as they are seen as less of a risk and are more likely to hold value over time. As climate change threatens much of the economic landscape, properties with a high EPC rating are seen as futureproof. There is also the added element of affordability, meaning less money spent on bills each month means less of a struggle to make mortgage repayments.
As green mortgages are fairly new to the industry, the standard can vary depending on provider, but you may be able to receive a discount of 0.25% off your interest rate for every EPC grade increase. Looking at all the mortgage offers available, a green mortgage might not work out to be the best deal for you but it is certainly something to consider.
There are a number of lenders currently offering green mortgages, including high street banks such as Barclays, and Halifax, as well as life companies for Green Lifetime Mortgages such as Just Retirement and Legal & General, plus building societies like Swansea Building Society and Kensington Building Society. If you are thinking of opting for a green mortgage, these are great places to start, but make sure you do your research or speak to an adviser to make sure it is the right choice for you.
