What are Green Mortgages?
For many individuals as well as financial institutions, the pressure is on to create ways to help make the world a greener planet. As a result of this focus, there has been a rise in mortgage lenders introducing incentives, to encourage borrowers to make their homes more energy efficient.
What are Green Mortgages?
A green mortgage is a financing option that offers favourable interest rates and/or incentives to homebuyers or homeowners who purchase energy efficient properties, or take additional borrowing on their mortgage to improve their home, and make it more energy-efficient and sustainable.
Some of these mortgage products provide financial incentives for borrowers to invest in green technologies and energy-saving improvements, such as solar panels, insulation, efficient heating and cooling systems, and more.
What are the benefits of Green Mortgages?
- Green mortgages encourage homeowners to invest in energy-efficient upgrades, which benefits us all. For example, having solar panels installed in your home would mean less reliance on the grid (and less reliance on non-renewable energy sources), as well as reducing the cost of running your home, and even selling power back to the grid.
- Making energy efficient changes to your property could enhance your property’s value. Homes with green features tend to have a higher market value due to their reduced environmental impact and lower operating costs. There are several mortgage lenders which will also give borrowers enhanced lending multiples if you purchase a property which has an Energy Performance Rating (EPC) of A or B, as they understand that your utility bills could be significantly lower than a property with a EPC rating of C or below. And therefore will have more surplus cash to put towards the mortgage payments.
- Improved comfort and health: By making your property more of a green home with better insulation, efficient heating and cooling systems, and improved air quality can all contribute to a healthier indoor environment for borrowers and their families.
What are lenders doing to help?
- In one of the biggest moves yet, one lender has announced that from the 1st June 2023, they will be offering interest free loans to borrowers taking additional borrowing for energy efficient home improvements.
- Many lenders already offer cashback to individuals that are purchasing or remortgaging a property with an EPC rating or A or B.
- Several lenders offering green mortgages are waiving their product fees and early repayment charges. They are also offering existing customers the opportunity to have a free EPC report done once improvements have been made to their property.
What to do if you are thinking of a making your home greener or looking to purchase an energy efficient property?
- Speak with your lender or a qualified mortgage adviser to establish how much you might be able to borrow to make your property greener, and to discover what incentives lenders are offering
- Speak with builders or industry experts on what you can do to your property and obtain quotes on how much it will cost you.
- When searching for a property, check the energy performance rating for your new home either with the estate agent or via the Governments website: https://www.gov.uk/find-energy-certificate
Will Sproule – 19th May 2023