By Harley Cheetham

Green mortgages are a great way for homeowners to reduce their carbon footprint and save money on their energy bills. Green mortgages are offered to buyers either as an incentive to buy a more energy-efficient property or to make energy efficiency improvements in their current home. Most green mortgages see lenders offer a more attractive interest rate, or a form of cashback to buyers. 

What are green mortgages?

The government hopes all properties in the UK will have an Energy Performance Certificate (EPC) rating of at least ‘C’ by 2035. The purpose of green mortgages is to encourage buyers to purchase more energy efficient homes or upgrade their existing properties. 

There are three main types of green mortgage: lower interest rate mortgages for properties with high energy efficiency ratings, capital release mortgages for energy efficiency improvements, and additional borrowing to make energy efficiency improvements. 

Advantages of a taking out a green mortgage

Green mortgages come with a wide range of benefits – for buyers, lenders, and the planet. A lower mortgage interest rate, meaning cheaper repayments, lower energy bills, a higher-value property, increased mortgage borrowing potential through less household spending on utility bills and a reduced carbon footprint are all advantages of green mortgages. 

There are a whole host of steps you can take to improve your property’s energy efficiency through a green mortgage, including installing solar panels, roof, loft, or cavity wall insulation, upgrading your boiler, energy efficient doors and windows, and fitting a ground source or air source heat pump. 

Mortgages for eco houses can be harder to come by compared with traditional loans, but they are available. Those wanting to secure a green mortgage must also meet other stipulations, such as having an Energy Performance Certificate (EPC) rating of either A or B, and committing to certain energy improvements to bring the property up to standard. 

It’s possible to remortgage and move to a green mortgage product, but you would need to meet the eligibility criteria to do so. Green mortgages are both financially and environmentally compelling, so if you are looking to buy a property or make energy efficiency improvements, a green mortgage could be a great option.

If you would like advice regarding a green mortgage, contact us now to speak to an advisor.