If you’re ready to buy an energy-efficient property or to make energy-efficient home improvements to one you already own, you can benefit from financial incentives offered for green mortgages. But what exactly is a green mortgage and what are the advantages of having one?
What is a green mortgage?
The UK government’s Net Zero Strategy aims to reduce the domestic contribution to man-made climate change by 100% by 2050. One factor that can help to reach this target is making housing more energy efficient. The heating for homes and workplaces alone contributes to almost a third of the UK’s carbon emissions. As such, homeowners, landlords and property buyers are encouraged to adopt more energy-efficient solutions. This can be achieved by buying an energy-efficient property or by making improvements to an existing home or investment property. To make either of these a more appealing option, lenders offer green mortgages, which give financial incentives.
Buying an energy-efficient property
If you buy a property in Bexleyheath with an energy efficiency rating of A or B on the Energy Performance Certificate (EPC), for example, you may benefit from a lower interest rate. The property can either be a new-build home or an older property that has been upgraded to the correct standard. Instead of a lower interest rate, you may benefit from cashback when buying a property with a high EPC rating. Green buy-to-let mortgages are available for landlords who wish to buy energy-efficient investment properties.
Making green home improvements to an existing property
If you already own a property, you can also benefit from the incentives offered with a green mortgage or remortgage. Some green mortgages, for example, offer a better rate or cashback when you upgrade your Pimlico property’s energy efficiency to an A or B rating after you’ve moved in. Alternatively, if you’ve improved the energy efficiency of your property since you first bought it, you can benefit from either cashback or a lower interest rate with a green remortgage. This also applies to landlords who wish to make energy-efficient improvements to their existing rental properties.
How to make energy-efficient improvements
There are numerous ways to improve your property’s energy efficiency. These include:
- Installing solar panels to generate renewable energy
- Replacing single-glazed windows with double glazing
- Insulating your property, such as loft, roof and cavity wall insulation
- Fitting composite doors, which look like wooden doors but are extremely energy efficient
- Upgrading your boiler
- Installing an air or ground source heat pump instead of having a gas boiler
The benefits of green mortgages
There are various benefits to having a green mortgage. These include:
- Lower interest rates. Lenders offer cheaper rates than standard mortgages if you’re buying an energy-efficient property that meets their criteria. They also offer reduced rates to borrowers who already own a property and want to make it more energy efficient.
- Some lenders offer cashback as an incentive to buy an energy-efficient property. The property usually has to have an EPC rating of A or B. Cashback may also be offered to existing property owners wishing to make green home improvements.
- Cheaper energy bills. With an energy-efficient home, you can look forward to much cheaper energy bills. Not only will you benefit from financial incentives with a green mortgage but you’ll save money each month on your energy bills.
- An increase in your property’s value. Properties with a high EPC rating of A and B are usually valued much higher than those with a lower rating. Therefore, if you use a green mortgage to upgrade your home’s energy efficiency, you’ll benefit from an increase in its value.
- A lower environmental impact. Aside from the financial gains you stand to make by meeting the criteria for a green mortgage, you’re doing your bit for the environment. Having an energy-efficient property is an ideal way to reduce your carbon footprint and contribute to the UK’s net zero goal.
We can help you to arrange a green mortgage
Whether you’re looking to buy a new build or an older energy-efficient property or you’re interested in carrying out green home improvements, we can help you to secure a green mortgage or remortgage. Just give our mortgage brokers a call on 01322 907 000 to discuss the criteria for a green home loan.
Not all lenders offer green mortgages but they’re becoming increasingly popular and our brokers have access to the latest deals available. They’ll compare the criteria, terms and incentives offered to find the best green mortgage deal to suit your needs.