Green Mortgages - What’s the Deal?

You may have seen information in the media recently regarding ‘Green Mortgages’ and wondered what it’s all about?

The UK government, like most governments around the world are trying to encourage people and companies to be more energy efficient. They wish people to be less reliant of oil and gas energy and use more renewable forms of energy such as wind, solar, & hydroelectric sources. This is part of the United Nations Agenda 2030.

So how does this affect the property or mortgage market?

These polices are therefore affecting house building standards and the government wishes new homes to have an Energy Performance Certificate (EPC) Rating of A or B. Some mortgage lenders have also come on board and offer special deals to customers either buying new homes that meet these criteria or indeed capital raising against their existing home to make ‘green’ improvements to their home. So, what are lenders offering?

Barclays are offering a slightly better deal on some of their standard mortgage deals when you buy a new build home with an EPC rating of A or B.

If you are buying a new build home Nationwide are offering a cashback of £250 if the EPC rating is B or £500 if the EPC rating is an A. They will also offer a lower rate if you are having additional borrowing to fund costs such as solar panels, insulation, a boiler upgrade, electric car charging station, & windows upgrade, as long as you spend a minimum 50% of the additional borrowing for these acceptable green purposes.

Virgin Money have partnered up with Carbon Neutral Britain and for every Greener Mortgage that completes, they will fund environmental projects, such as the development of wind, solar and hydro renewable energy. The funding will offset the equivalent of the average UK home’s carbon emissions for an entire year. Together with Carbon Neutral Britain, they’re also aiming to plant 100,000 trees from the sale of their Greener Mortgages. They, like Barclays are offering a slightly lower interest rate than on some of their standard deals.

Natwest are also offering slightly lower interest rates on some of their deals.

Does this extend to Buy to Let mortgages?

Yes, buy to let mortgage lenders are also starting to get on board. Buy to let mortgage lenders already require the EPC rating to be at least an ‘E’ rating. The Mortgage Works for example will offer a further advance of up to £15,000 to make ‘Green’ improvements on a special deal subject to certain criteria for improvements on the rental property.

No doubt we will see more lenders getting on board over the coming months.