Is a green mortgage right for you?

With rising energy costs and growing concerns about the climate you might be thinking what can you do to save money on your energy costs while living more sustainably. One way could be to get what is known as a ‘green mortgage’.

But what exactly is a green mortgage and how can it benefit you?

What is a green mortgage?

A green mortgage offers reduced interest rates or cashback incentives to buyers of homes with higher Energy Performance Certificate (EPC) ratings. This could be to people who buy a more energy efficient home or make improvements to their current own home to increase its energy efficiency.

House hunting? Here’s what to look for.

If you’re in the market for a new home, check the EPC rating. The EPC details the current and potential energy efficiency of a property. Many lenders offer green mortgages for homes rated A, B or C. New builds will have predictive energy assessments, but if you’re buying an existing home, the estate agent should provide the EPC or you can check the government’s EPC register.

What’s the benefit of a Green Mortgage?

With a green mortgage

• the interest rate will usually be lower than standard mortgages, or
• the lender may give cash back if the property meets the EPC requirements, or
• the lender may let you borrow more on the property as the running costs will be lower.

What if I’m not moving?

If you are not planning to move, you can still benefit from a green mortgage by improving your home’s EPC rating. Check your EPC to see what work you could do to the home to make it more energy efficient. It will also tell you the cost savings you could make. If you don’t have an EPC for your home, you could have one carried out.

Some simple things you could do to improve your energy rating are:

• put in energy efficient light bulbs
• insulate the hot water tank
• install heating controls on your heating system.

More significant savings you could consider:

• putting in loft or cavity wall insulation
• installing new, more energy-efficient windows
• replacing your boiler with a more energy efficient model
• install a heat pump in your home
• install solar panels on the roof of your home.

Once the work has been carried out you should have the EPC reviewed as it may give a higher rating which might enable you to switch to a green mortgage. The mortgage lender will usually want to see the refreshed EPC certificate to offer a green mortgage.

As always, before taking out any mortgage or doing a remortgage you should get your own financial advice. However, what is clear is that mortgage lenders are now offering green mortgages to encourage us to buy and live in more energy efficient homes.