Lower mortgage rates and energy bills may help persuade more homeowners to consider green mortgages. Indeed, a number of lenders are launching green home loans where borrowers can help the environment and get a lower mortgage rate at the same time – particularly useful if you are taking out a large loan.
Green mortgages generally work in two ways – they either encourage borrowers to make their existing home more energy-efficient or reward them for buying a home with a high energy efficiency rating.
For example, TSB recently launched the Green Additional Borrowing range where customers making home improvements qualify for cheaper rates. Both landlords and residential mortgage customers can borrow £10,000 or more to fund improvements such as insulation, solar panels or a heating upgrade. Rate reductions of 0.5 per cent are available where the improvements will reduce the emissions from borrowers’ homes. Nationwide’s Green Additional mortgage also funds a range of upgrades to an older property, such as double glazing, insulation, solar panels or a more efficient boiler. At least half of any additional borrowing must be spent on energy-efficient home improvements.
For those buying homes which already have high energy efficiency ratings, Nationwide will give up to £500 cashback via its Green Reward scheme, while NatWest’s Green Mortgages come with discounted rates for those buying an energy-efficient property. Virgin Money also offers Greener Mortgages to those buying energy efficient new-build homes, with cheaper rates than on standard deals.
Green mortgages remain a niche area but with more lenders offering these products in response to growing demand from borrowers to do their part to tackle climate change, the range of choice is improving all the time. However, as with any other mortgage it is important to compare products, rates and fees to ensure you are getting the right deal for you. This is where a whole-of-market broker, such as AWS Private Finance, can help. We know which lenders offer green mortgages and can advise as to the best one for your particular property and circumstances, particularly if you require a large loan. Get in touch for more information.