Green Mortgages UK - What Is a Green Mortgage and Can It Save Me Money?

A green mortgage – sometimes referred to as an eco mortgage or a green mortgage loan – is a mortgage where you get a discounted rate and/or cash back if your home has an EPC rating of A or B, or your buy-to-let property has an EPC rating of C or above.

Homes that have A or B EPC rating are typically new builds, but you can make certain home improvements – like adding insulation, double glazing, etc. – to improve your EPC rating.

You can find more tips on how to improve your EPC rating below.

Benefits

• You can get a discounted rate and/or cash back which can save you money on your mortgage
• It will encourage you to reduce your emissions

Drawbacks

• You need a certain EPC rating to benefit from this type of mortgage
• There may be better rates available on mortgages that aren’t green – although this may change over the next year

Over the next year we could see more green mortgage solutions and initiatives where a better EPC rating can improve your affordability. This is because a better EPC rating means your home is more energy efficient which will result in lower energy bills. It is speculated that lenders will then take these savings into account when calculating your affordability, enabling you to potentially borrow more on your mortgage.

We may also start to see products where your rate can change as your EPC rating improves. For example, if you have a fixed rate and you do work on your property to improve your EPC rating, your mortgage rate could potentially decrease during the fixed period.

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We’re seeing more and more UK lenders bringing green mortgage products to the market, giving you different options to choose from.

Here are some green mortgage lenders and the rates currently available (09/11/21):

Residential Products

• Halifax Green Mortgage – product purchase rates starting from 1.09% at 60% LTV
• Natwest Green Mortgage – remortgage rates starting from 1.17% at 60% LTV

Buy-to-Let Products

• BTL Leeds Green EPC (A-C) - product purchase rates starting from 1.62% at 75% LTV
• BTL Bank of Ireland Green Mortgage – remortgage product range rates starting from 1.75% at 60% LTV

Your EPC (energy performance certificate) rating is a way to measure the energy efficiency of your home in a monetary value. It contains information about a property’s energy use and energy costs. It also provides recommendations about reducing energy and saving money.

EPC ratings use a scale from A - G, A being the most efficient. The average property in the UK has a rating of D or E. An EPC is valid for 10 years.

EPCs are required whenever a property is built, sold or rented. You also have to arrange an EPC for potential buyers and tenants before you’re allowed to market your property.

How Do I Find Out My EPC Rating?

Find out your EPC rating on the Government website.

How to Improve Your EPC Rating

• Switch to LED lightbulbs
• Insulate your walls and roof
• Have a more efficient boiler fitted
• Install double or triple glazed windows

You can find more recommendations when you find out your EPC rating on the Gov website.