What is a green mortgage?

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If you’re considering buying an environmentally friendly home or making your current home more energy-efficient, a green mortgage could be financially attractive to you.

A green mortgage is a type of mortgage that provides incentives or benefits to borrowers for purchasing, building, or renovating an energy-efficient or environmentally friendly property. They aim to promote the construction and renovation of eco-friendly homes as the UK moves towards its net zero goal.

How do green mortgages work?

A green mortgage is the same as a standard mortgage but rewards you for buying or owning an energy-efficient home. If your home has an EPC rating of A or B, you could be eligible to receive:

  • A lower mortgage interest rate, meaning cheaper repayments
  • Cashback from your lender

You’ll also benefit from:

  • Lower energy bills through a more energy-efficient property
  • A reduced carbon footprint
  • A potentially higher property value as eco-friendly homes become more and more desirable

Some standard mortgages can become green mortgages if you commit to making energy-efficient improvements in your home. Examples of home improvements you can make to increase your energy efficiency include installing double-glazed windows, solar panels or a more energy-efficient boiler.

Why are lenders offering green mortgages?

Lenders are keen to provide green mortgages as they perceive green buildings and their owners as a lower overall investment risk. Green is seen as a lower risk because:

Green buildings typically cost less to run, so borrowers are more likely to meet their mortgage repayments
Green buildings are more likely to retain or increase their value as environmental concerns grow

How do I apply for a green mortgage?

Applying for a green mortgage works in the same way as for any mortgage. There are several lenders and institutions ready to offer green mortgages.

As with any type of loan, it’s essential to consider the benefits and potential drawbacks of a green mortgage before making any decisions.

If you’re interested in a green mortgage but don’t know where to start, please get in touch; one of our advisers will be happy to help.