Green mortgages reward borrowers buying energy efficient properties, or those who make energy saving improvements to their homes, by offering them discounted mortgage rates or cashback.
Growing numbers of lenders offer green mortgages, which can be either fixed or variable rate deals. The right type of green mortgage deal for you will depend on your individual circumstances and whether you need budgeting certainty or are comfortable with fluctuating payments.
The main benefit of green mortgages is that they encourage homeowners to consider buying energy efficient homes, or to improve their current properties, which should help the Government to reach its target of net zero greenhouse gas emissions by 2050.
As part of the #MortgageInsider podcast our Head of Sustainability and Customer Experience, Keeran Campbell joins Rachel Hunnisett of the Green Finance Institute and Phil Spencer from Location, Location, Location, to discuss Green Mortgages. In the podcast , they break down how Green Mortgages work, the benefit for customers, the role these schemes could play in Net Zero and what the future of Green Mortgages may look like. The podcast was recorded in June 2024 and aimed at mortgage brokers, but the information may be valuable for our customers too. You can listen here.
Green mortgage eligibility criteria
Incentives provided by green mortgages are usually only available to those buying properties with an Energy Performance Certificate (EPC) rating of B or above, although some may be available to homeowners with a lower C rating.
You may be eligible for a green mortgage if you already own a property which you’ve made more energy efficient by making improvements such as fitting solar panels, insulating your loft, or installing double-glazed windows.
When applying for a green mortgage, you’ll need to provide the same evidence of your income as you would when applying for any other kind of mortgage, so lenders will typically want to see three to six months of payslips, along with bank statements over the same period. They’ll also want to know about any debts you have such as credit cards, personal loans or car finance.
Finding the best green mortgage deal
The number of green mortgages available is increasing steadily, which can make it tricky to find the best deal to suit your needs. Here at L&C we have access to over 90 lenders and can search the market to find the best green mortgage for you, completely free of charge.
Even if you qualify for a green mortgage, it’s worth comparing alternative mortgage deals as these may end up being more cost-effective if they offer lower rates or have cheaper arrangement fees.
