Green Mortgages


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What is a green mortgage?

Homes account for 15-20% of all UK’s total carbon emissions. These mainly come from the natural gas we use to heat our homes: it’s a fossil fuel which releases carbon into the atmosphere when it’s burned.

As part of the government’s Green Finance Strategy to become a net zero emissions economy it is giving funding support to green mortgages to improve the energy efficiency of the 17 million homes in the UK with Energy Performance Certificate ratings (EPCs) lower than band C.

Green mortgages encourage new home builders to construct more energy-efficient homes, and home owners to undertake energy-saving home improvements to boost their property’s energy rating.

Green mortgages give home owners discounted mortgage rates once they’ve upgraded the energy rating of their home.

They also give home buyers cheaper finance on properties with the most efficient A and B energy ratings: further encouragement to owners to make improvements or finish properties to the highest energy standards.  

Doing the right thing – and saving money

A significant proportion of homeowners in the UK would actually be willing to pay more for their mortgage if was helping the environment.

Research by the Intermediary Mortgage Lenders Association in October 2020 found that one in five homeowners would be willing to pay an extra £100 a month for their mortgage if it helped to lower their carbon footprint.

  • The opportunity to save money on their energy bills appeals to 53%
  • 43% are interested in green mortgages because they feel they’ll be helping to save the environment

Many mortgage applicants (33%) believe that green mortgages will cost more than standard mortgages. In fact, three-quarters of the lenders who have launched green mortgage products, or are planning to do so, are offering them at cheaper rates, or the same rates, as standard mortgages.

Adding value with energy-saving improvements

It’s usually only new-build homes that achieve the highest energy efficiency ratings. In 2020 most of the old stock of houses and flats in the UK were rated D for energy efficiency.

Research shows that improving a UK property’s energy rating to an EPC of A or B can significantly increase its value. The price premium varies across the country, with the greatest gains in areas with lower property prices:

  • + £16,219 in the north east (12.2%)
  • Value increases of as much as £24,766 in Lichfield in Staffordshire

What is my home’s energy rating / EPC?

You can find the EPC for your own home, or a property you’re interested in buying, just from its postcode on the national register of EPCs

Best home improvements to boost your home’s energy efficiency rating

  • LED Light bulbs
  • Wall and roof insulation: can save up to £470 on energy bills.
  • Double glazing
  • A better boiler: a condensing combi boiler only heating hot water when you need it can save up to £300 a year.
  • Possibly solar panels – either photovoltaic (solar PV, or SPV) which are powered by daylight, or solar thermal, using the heat from sunshine to heat water

Over half a million British homes have installed SPV panels.

Entry to the feed-in tariff payment for excess energy produced by SPV panels ended in March 2019. From January 2020 you could join the Smart Export Guarantee available from some big energy suppliers.

Do I qualify for a green mortgage?

You can be a first-time buyer, or an existing home owner upgrading or remortgaging

Most green mortgage products are only available on properties with an energy efficiency rating of A or B – which are usually new-builds

You will usually need a deposit of at least 15% (up to 40% for the best deals)