Green mortgages are suspected to become more popular with more lenders now offering this type of mortgage, as well as the ongoing need to improve our homes to be more energy efficient and environmentally friendly resulting in lower energy bills!
What is it a green mortgage?
If you buy a property that’s more energy efficient or make it so, once you’ve bought it, some lenders could give you a lower interest rate or cash back. This a classed as a ‘green mortgage’.
Who qualifies
There are two types of green mortgages:
Living in a energy-efficient home:
If the property has an energy performance certificate (EPC) rating of A or B, you could get cashback or a lower interest rate. This mortgage is available to home buyers and sometimes re-mortgagers.
Making energy efficient (green) home improvements:
These types of improvements could include; installing solar panels or double-glazed windows. Generally, you could get cashback on money you borrow to make these upgrades or be offered a discounted interest rate.
Which Lenders Offer it
At the moment there aren’t many lenders who offer this type of mortgage. Getting in contact with a mortgage advisor would open up more options for you. Your advisor would be able to see what green mortgages are available to you and advise you accordingly.
A green mortgage could beat a non-green from the same lender but it may not beat rates from other lenders. Your advisor would look at a wider range of lenders. Doing this, they will be able to see if there are lower rates available to you.
How to apply for a green mortgage
Just like with any mortgage application, before you apply you want to give yourself the best chance possible.
Get prepared for your mortgage application:
Read our Improving Your Credit Score for A Mortgage blog to learn what could affect your credit score & how to make it look it’s best for lenders to see.
Or as a first-time buyer, reading Your Journey from Renter to Homeowner, a First-Time Buyer’s Guide would help you prepare for your application and give you an overview of the whole process.
Have an accepted offer on the property so you can apply for the mortgage. The home you are buying will have an EPC rating of A or B or you will need to show what improvements you are going to make. You may also need to show how they will positively impact your EPC rating.
This is where your mortgage advisor will begin looking for the right deal for you.
Green mortgages are there to incentivise people to buy a home that’s ‘green’ or make their new home greener. They don’t always offer the lowest rates or most suitable mortgage for everyone, but it is great to have options.
Your home may be repossessed if you do not keep up repayments on a mortgage or any other debt secured on it.
