Is It Worth Getting a Green Mortgage?

Posted: 18th August 2023

There are always new and competitive mortgage deals coming onto the market, but this new type of mortgage is slightly different from anything else we’ve seen. Mortgage lenders are starting to offer green mortgages which reward people for buying, remortgaging or working towards energy-efficient homes.

There’s nothing green about green mortgages other than the fact that they are there to encourage people to live in more environmentally friendly homes. Mortgage companies are working with the government to achieve zero net carbon emissions by 2050 by helping people create eco-friendly homes and rewarding those with low Energy Performance Certificate (EPC) ratings.

If you’re someone who is moving into an energy-efficient home that has an Energy Performance Certificate (EPC) rating of A or B, or you plan to make your home more energy efficient by doing some refurbishments such as installing a solar panel or electronic car charging point, then they might be worth considering.

How Do Green Mortgages Work?

Many mortgage lenders such as Barclays, Natwest, Nationwide, TSB and Virgin Money are offering some kind of reward for those with an EPC rating of A or B. Some lenders are offering cash back on mortgages. Others are giving lower mortgage rates or promising to lend loans with zero interest for those who spend the money on energy-efficient home improvements.

Green mortgages are a great incentive to lower EPC ratings and to allow people the opportunity to make home improvements that will reduce the energy used when they may not have had the spare money or motivation to do it.

Living in a green home means that it is more energy efficient, whether that involves more insulation or triple glazing to keep the heat in. This helps to reduce the amount of energy used because it is being retained in the house better, meaning lower energy bills.

Borrowers who are working out whether it is worth going for a green mortgage or not are better off firstly finding out what their current EPC rating is. If they have a rating of A or B, then it is a good idea to check what the current mortgage rates are and see how they compare with the green mortgages that are being offered.

Alternatively, if you are looking to make renovations to your home, including upgrading a boiler, adding cavity wall insulation, loft insulation or replacing windows with double or triple glazing, then you may be able to take advantage of the currently available green mortgage offers. For instance, Nationwide has a 0% Green Additional Borrowing mortgage which allows people to borrow between £5000 – £15,000 to make energy-efficient home improvements.

Depending on the circumstances, some people may be able to find lower mortgage rates for green mortgages whilst also lowering their home’s energy use too. At the moment, green mortgages are a fairly new concept, so depending on how popular they become, they might quickly become a thing of the past. Make sure to do your own independent research and get financial advice where necessary before making any decisions on which mortgage to choose.