AdviceGreen homes

How green mortgages work

57% of us want to be more eco-friendly over the next five years, according to The Rated People Home Improvement Trends Report: 2021. Many UK banks and other mortgage lenders have recognised this desire and are now offering ‘green mortgages’ to incentivise people buying or creating energy efficient homes.

If you’re planning to buy a home in the future, a green mortgage could help you save money and cut your carbon footprint at the same time. Find out more about how green mortgages work in the UK in the blog post, below.

What is a green mortgage?

Block of flats next to river during sunrise

A green mortgage is a specific mortgage deal for homeowners that buy energy efficient houses or make eco improvements to their homes. Usually, the home will need to have, or be able to have, a valid Energy Performance Certificate (EPC) with an A or B rating to be eligible.

How much money could I save with a green mortgage?

Certain green mortgage deals offer cheaper rates than other types of mortgages, whilst other deals offer you cashback. Some lenders offer both benefits.

  • Cheaper rates: Green mortgage deals typically offer loan-to-value (LTV) rates of at least 75%, but many go up to 90%.
  • Cashback: Some providers will give cashback to your solicitor on the same day you drawdown your mortgage.

The exact amount of money you’ll save with a green mortgage depends on the lender you choose.

Aside from saving money on your mortgage itself, having an eco-friendly home will save you money long-term. Your electricity, water and heating bills will likely be lower, as your home and the appliances inside (such as boilers and washing machines) will use less energy and therefore cost less to run.

Eligibility criteria for green mortgages

Green mortgages: Couple speaking to mortgage advisor in office

You can find a green mortgage deal for both new-build and existing properties. Some lenders may only cover one type of home or the other.

Can I get a green mortgage if the home I’m buying isn’t energy efficient?

Many lenders will allow you to get a green mortgage for a non-energy efficient home, as long as you commit to spend a set amount of money on installing green home improvements. It’s likely that you’ll need to show that you’ve improved your home’s EPC rating by a certain number, within a certain timeframe.

Which banks offers green mortgages?

Couple carrying moving boxes into new home

At the time of writing (July 2021), the banks and other financial institutions offering green mortgages include:

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