Borrowers wanting green mortgages have a growing number of options to choose from, with lenders recognising the Government’s push for homes to be made more energy efficient. In recent weeks, Halifax has extended its green mortgage range so those looking to remortgage or buy are eligible for £250 cashback if the property has an A or B energy performance certificate rating (EPC). The Government is aiming for all homes to reach an energy efficiency C rating by 2035 to help meet the net zero carbon target for the country. To help incentivise homeowners to make their homes more efficient, lenders are extending their ‘green mortgage’ ranges, which offer financial benefits to those whose properties have the highest energy efficiency ratings. Here, we explain how green mortgages work, and look at ways you can make your property more energy efficient.
How do green mortgages work?
Green mortgages essentially reward borrowers in 2 different ways:
• Rewards for having en energy-efficient home
Lenders offering green mortgages include Nationwide Building Society, which has a ‘Green Reward’ mortgage scheme that offers those buying a home with EPC A rating £500 cashback, or £250 if the property has a B rating. Both NatWest and Barclays offer a preferential interest rate if you buy or remortgage a property with a rating of B or above, although Barclays’ offer only applies to new-build homes bought directly from a builder or developer.
• Rewards for carrying out green home improvements
Several lenders offer cashback or better rates to help borrowers make improvements to their property in order to make it more energy-efficient. Halifax offer up to £500 cashback to some of their customers looking to carry out eligible home improvements such as fitting a new boiler, while Nationwide offers preferential rates on 2 or 5 year fixed rates to those looking to borrow additional funds for energy-efficient changes to their home. Barclays also offers up to £2,000 to existing mortgage holders who carry out green home improvements to their property, as a ‘greener home reward’. It’s a good idea to check the terms & conditions to find out what rewards are on offer and what improvements are eligible, as every lender will differ.
How to make your home more energy efficient
Some improvements to make homes more energy efficient don’t cost much at all, such as draught-proofing doors and windows. Loft insulation, which involves fitting rolls of mineral wool insulation between joists, is also relatively inexpensive and can make a huge difference to how warm your house is. If you have cavity walls, you might also want to consider cavity wall insulation. This involves making holes in external walls and injecting insulation material into the space between your internal and external walls to prevent heat escaping. However, other energy efficient improvements can run into many thousands of pounds. For example, according to the Energy Saving Trust, the typical cost of installing a heat pump is around £7,000 to £13,000, although there may be grants available to help cover costs. You can find out more about these at the Energy Saving Trust.
