Green mortgage deals

Are you eligible for a green mortgage?

Each mortgage lender and product has its own criteria - but the green eligibility focuses on the energy efficiency (or potential future energy efficiency) of your property. 

Some lenders look at the EPC (Energy Performance Certificate) band, and most will be looking for properties to fall into categories A or B. Others tend to use the numerical value associated with the EPC rating of your property, in this, they usually want a rating of 80+.

According to buy-to-let landlord statistics, this minimum EPC rating could be raised to a C by 2025 for new tenancies, and by 2028 for existing ones. If you’re looking for a green mortgage to borrow the cost of improving the energy efficiency of your existing home, you'll need to show how the improvements will help you achieve an A, B or 80+ EPC rating.

What is an EPC rating?

An EPC (Energy Performance Certificate) is needed for all residential properties that are built, sold or rented. An assessment is carried out to establish energy efficiency on a scale from most to least efficient using either A to G and/or 100 to zero. 

EPC ratings last for 10 years, but you can apply for a new assessment if you have renovations carried out to improve the rating. If you are purchasing a new build home that is not yet complete, a PEA (Predicted Energy Assessment) should be available for it.

Which lenders offer green mortgages?

Green mortgages are slightly more common with building societies than high street lenders, although popularity is rising with the big six lenders. Barclays’ green home mortgage products are only available on new build properties with an EPC rating of A or B or above 81. NatWest green mortgages, however, are available for mortgages and remortgages on any EPC A or B level properties. Both lenders offer this product for residential and buy-to-let mortgages.

Nationwide offer a cashback option for properties already rated A or B, and a ‘green borrowing’ option to improve the energy efficiency of a lower rated home. Ecology Building Society are a specialist finance company for those looking to carry out special projects, such as the construction of innovative self-build homes with a focus on sustainability.

Are green mortgages cheaper than regular mortgages?

In theory, green mortgages should be cheaper than conventional options, as lenders tend to reserve their most competitive rates for this purpose, meaning that the green mortgage should work out to be the cheapest option that each lender offers.

In reality, however, there are lenders not necessarily offering green mortgages, who have lower typical rates than those offered by green mortgage providers. As rates have risen quite sharply across the entire industry in recent months, this means that, unfortunately, green mortgages won’t always be your cheapest option in the short term.

It could be argued, however, that as a longer-term investment, buying an energy efficient home now will help you retain its value and potentially achieve lower remortgage rates in the future. If you’re looking at the wider picture, the savings you make on energy may also outweigh any additional costs on interest, especially if they are negligible, so it’s certainly worth exploring this further, if ethical consumerism is your major focus.