Should You Get A Green Mortgage? | moneyfacts.co.uk

Derin Clark

Derin Clark

Online Reporter
Published: 27/10/2020

An energy efficient home can not only reduce monthly utility bills and be easier to sell, but can also lower mortgage rates through applying for a ‘green’ mortgage.

Although green mortgages are still relatively new products, they are becoming increasingly popular with mortgage lenders and many well-known high street lenders are now offering these types of mortgages. Barclays, for example , has a Barclays Green Home Mortgage range that enables those purchasing a new-build property with an energy efficiency rating of A or B to get a lower mortgage rate. Meanwhile, back in February, Nationwide launched its green mortgage range that offers preferential rates to those buying a new-build property that has an A-rated Energy Performance Certificate (EPC).

Should you get a green mortgage?

With mortgage rates rising, a green mortgage may be a good option when looking to secure the lowest rate, especially for those looking to borrow with a smaller deposit. A green mortgage does often restrict the type of house a buyer can purchase, for example, many are only available on new-builds that have an energy efficiency rating of B or above. As well as this, those looking to purchase a property with just a 10% deposit or less will likely still struggle to get a mortgage, even a green mortgage, in the current climate. Those considering a green mortgage should consider speaking to a mortgage broker who will be able to advise them if it is the best option for their individual circumstances.

Future of green mortgages

Although it is impossible to predict the future, the likelihood is that green mortgages will grow in popularity over the coming years. As consumers and the Government become increasingly aware of the negative impact energy consumption is having on the environment and the need to reduce emissions, it is likely that more incentives, such as lower rates offered through green mortgages, will be launched to help encourage greener lifestyles.

Can you get a green lifetime mortgage?

In July Just Group launched the first green lifetime mortgage in the UK. This mortgage offers a discounted interest rate to new lifetime mortgage customers whose property has an A or B EPC. Although this is a new product in the lifetime mortgage and equity release sector, just as with green mortgages, it is likely to grow over the next few years as homeowners are encouraged to become more energy efficient. As such, homeowners living in a property with an EPC rating of A or B and thinking about taking out a lifetime mortgage or equity release in the future should consider a green lifetime mortgage or equity release deal as it may result in lower rates. For those considering equity release, an equity release broker will be able to provide information on the current green deals available on the market.

How to improve the energy efficiency rating

All homes that are built, sold or rented must now have an EPC, which gives the property an energy efficiency rating from A or 100 (the most efficient) to G or 0 (the least efficient). More information about EPC and how to get one can be found on the Government website.

Having an energy efficient home can help sell the property, as well as cutting down on energy bills. There are a number of ways that homeowners can improve the energy efficiency of their home including:

  • Installing a new boiler,
  • Insulating lofts and cavity walls,
  • Fitting double or triple glazing,
  • Installing solar panels,
  • Hanging thick curtains and buying stick-on insulation for doors.
Disclaimer

Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.

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