What is a green mortgage?
Essentially, green mortgages are designed to enhance the desirability of owning an eco-friendly property. In addition to the monthly savings on energy bills, borrowers can receive cashback and/or enjoy improved interest rates when obtaining green mortgages for an energy-efficient property.
Just five years ago, it would have been challenging to find a mainstream lender willing to offer preferential treatment based on an energy performance certificate (EPC).
However, today, a small number of high-street banks have developed their own versions of green mortgages, claiming to provide such benefits.
What do you need to do to qualify for green mortgages?
Green mortgages generally fall into two categories:
1. Those that incentivise living in an energy-efficient home: If the property you are purchasing or residing in has an excellent Energy Performance Certificate (EPC) rating of A or B, you can benefit from cashback or a more favorable interest rate on your mortgage. This type of green mortgages are available to homebuyers and, in some cases, those looking to remortgage.
2. Those that incentivise ‘green’ home improvements: These green mortgages provide rewards for undertaking eco-friendly home upgrades. Examples of green improvements include replacing single-glazed windows, upgrading heating systems, or installing solar panels. Typically, lenders offer discounted interest rates or cashback on the funds borrowed for enhancing the energy efficiency of your home.
Lenders are increasingly willing to provide these incentives because they view energy-efficient properties as less risky investments in the context of combating climate change. Such properties are also more likely to retain their value. Moreover, homeowners who spend less on monthly energy bills have a reduced risk of facing difficulties in meeting their mortgage repayments.
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The above rates are all subject to status Fixed Rates start from 3.95% typically rates around 6% which would have a broker and lender fee.
All correct at date of publication 10/03/2023
