You may have heard about green mortgages in the news. But did you know you could potentially save money by taking one out? In this article we explain how they work and if you’re eligible to get one.
What are green mortgages?
In a nutshell, green mortgages reward you for buying or owning an energy efficient home or for making energy efficiency improvements to your property.
How do I know how energy efficient my house is?
An Energy Performance Certificate (EPC) is a document that ranks properties in terms of energy efficiency; the most energy efficient homes are rated A and the least efficient rated G. However, if you’re not sure what yours is you can check it here.
How do green mortgages work?
There are three main types of green mortgages:
- Some lenders will offer you cheaper rates if your home has a high energy efficiency rating, such as an EPC rating of B or higher.
- Other lenders will offer cashback on their standard mortgages if the property meets its criteria on energy efficiency.
- While other mortgages offer cashback or cheaper rates if you make energy efficiency improvements to your home.
Why were green mortgages introduced?
The UK Government has pledged to reach net zero carbon emissions by 2050. And in a bid to achieve this, the Government says it expects all UK properties to have an EPC rating of at least C by 2035.
Green mortgages are a way that lenders are supporting the Government’s pledge because they offer incentives for homeowners to live in energy efficient homes and make energy efficiency improvements if their home could benefit from them.
Why should I apply for a green mortgage?
So why should you apply for a green mortgage? There are several reasons that may make it an attractive option for you. These include:
- Access to cheaper rates: If being eligible for a green mortgage means you can get access to lower rates on mortgages, this means you’ll pay less on your monthly mortgage payments. So you could save money each month. You may also be able to get cashback too.
- Lower energy bills: And by making your home more energy efficient, you’ll spend less on your energy bills. This means even more cash saved!
- Adding value to your property: And with the aim to get all properties to a minimum EPC rating of C by 2035, homes with high energy efficiency ratings are likely to become even more sought after in the future. And this means their value could shoot up. So if you take action now to improve your home’s energy efficiency rating you may be boosting its value considerably.
Can I apply for a green mortgage?
This depends. If you want to apply for a green mortgage that offers lower rates on properties with a high energy efficiency rating, you’ll need to make sure your property meets the lender’s criteria for this. But don’t worry too much about this – speak to one of our team of expert advisers who will be able to explain this to you. And bear in mind you can remortgage onto a green mortgage if your home’s EPC rating is high enough too.
If you want to benefit from cheaper rates or cashback by making energy efficiency improvements to your home, then again it’s wise to chat it through with our team of expert advisers so that you’re fully informed about your options.
Just remember, like when you take out any mortgage, in order to be accepted you’ll still need to meet the standard mortgage lending criteria set by your lender.
So now you know more about green mortgages you can see the potential benefits of taking one out.
And if you have any questions or want to learn more about how we can help, please get in touch with one of our green mortgage specialists, who are on hand to guide you through the process.
Important information
Your home may be repossessed if you do not keep up repayments on your mortgage.
There may be a fee for mortgage advice. The actual amount you pay will depend upon your circumstances. The fee is up to 1%, but a typical fee is £99.