What are Green Mortgages?

A growing number of lenders are now offering green mortgages, which offer mortgage rewards for opting for an energy-efficient home. But do they really save you money?

What Are Green Mortgages?

The idea of green mortgages is to reward buyers who opt for an energy-efficient property in the form of cashback or a better interest rate. While not all lenders offer green mortgages, at the time of writing several high-street lenders now have such products on offer.

Which Lenders Offer Green Mortgages?

A small number of high-street lenders currently offer green mortgages. They are:

• Nationwide – £500 cash back with a property score of 92 or above or £250 cash back with a score of 86 to 91. Nationwide also offer customers a better rate on green home improvement loans.
• Barclays – lower rate offered with a property energy efficiency rating of 81 or above, or is in energy bands A and B. Barclays also offers a green home reward for customers wanting to make green improvements to this home, such as solar panels, insulation or heat pumps.
• Natwest – lower rate on a property with an A or B energy rating on a 2 or 5-year fixed product.
• Virgin Money – lower rate on a property with an A or B energy rating. Virgin Money also offers existing customers the option of additional borrowing to make green improvements.
• TSB – Existing TSB customers can borrow £10,000 or more (up to 85% Loan to Value) to fund a range of green home improvements. This can include insulation, a heating upgrade or solar panel installation.

Do Any Non-High Street Lenders Offer Green Mortgages?

Other lenders that offer green mortgages include:

• Gatehouse Bank – Offers a reduced rate to buyers and landlords who purchase an energy-efficient property. A or B energy rating is required. They have also teamed up with Forest Carbon to offset the carbon footprint of the property for the entire fixed term of the product (two or five years) of every Green Home Finance product.
• Quantum mortgages offer buyers an additional 2% loan to value the amount on properties with an A or B energy efficiency rating. This amount can also be borrowed to bring the property up to the required energy efficiency rating.
  Swansea Building Society – offers a discounted interest rate for properties with energy efficiency rating band A or B.

What Do You Need To Quality For a Green Mortgage?

If you are buying an energy-efficient home, that is a property with an energy efficiency rating of A or B, you should be able to access green mortgage products. Some lenders will also offer incentivised products if you are making a property more energy efficient.

What is a Green Remortgage?

If you have improved your own property to an energy rating of B or above and want to remortgage or take a new product out, you may qualify for green mortgage products with lower interest rates and, in some cases, cashback. To understand what energy efficiency rating your property is, you should get an Energy Performance Certificate or EPC.

What is an Energy Performance Certificate?

An Energy Performance Certificate (EPC) is a document that a property owner gets once an energy assessment is carried out at their property. It shows how energy efficient the property is and checks for things such as insulation. They last 10 years and are required when selling a property, so it is always worth checking with the owner or estate agent that the property has one.

The energy ratings

Ratings go from A to G, with A being the most energy efficient. Older properties can be less energy efficient, so buying a new build property might be something to consider if you want a green home and be eligible for a green mortgage.

What Tools Are Available For Green Mortgages?

Green mortgage deals may not always be the cheapest option for you. The best way to compare deals and rates is to use an online comparison tool and also speak to an independent mortgage advisor, who can access the entire market of products and help you decide which product is right for you.