Content Writer
Mortgage Advisor & Director
If you’re looking for a green mortgage, you’ll need to find a lender that offers that type of product. There are now a substantial number of green deals on the market, with over half of all UK lenders having some form of mortgage deal intended for energy-efficient homes.
However, each green deal has individual perks and criteria, so it’s important to find the right green mortgage lender for you. Here, we look at how to go about doing so.
What is a green mortgage lender?
Any lender offering green mortgage deals could be referred to as a ‘green mortgage lender’. Although it’s important to understand that it’s not the lenders that have green credentials; they just offer a range of green mortgages. The one exception to this is Ecological Building Society, who exclusively offer eco-conscious mortgage products. However, they are predominantly aimed at those looking for a self-build home.
Green mortgages are intended for people looking to either buy an energy-efficient home or to improve the energy rating of their existing property. Lenders offering green mortgages typically require a minimum EPC rating, or for you to be trying to achieve a minimum EPC rating if you’re using the mortgage for green improvements. Other than that, their mortgage criteria are similar to any other lender.
Best lenders for green mortgages
The best lender for you will depend on your circumstances, and the reason you need a green mortgage. Not all lenders offer additional borrowing for green home-improvements, or green mortgages for buy-to-let purposes, for example.
If you’re looking to buy an energy-efficient home, many lenders will only consider new build homes. The criteria also vary between lenders in terms of what EPC rating is required to qualify for a green mortgage, so it’s a good idea to seek help from a broker with experience in securing green deals, like ourselves.
Here are some examples of green mortgage lenders with varying criteria:
1. NatWest
NatWest is one of the ‘big six’ mortgage lenders in the UK, offering a wide range of mortgage products, including some green products. They offer reduced rates on the green purchase mortgages and remortgages to those customers buying property with an EPC rating of A or B, borrowing up to 85% LTV.
They also offer cashback on completion of any Green mortgage or remortgage, however, the property must already qualify for the required EPC rating, no prospective EPC ratings will be considered.
2. Kensington Mortgages
Kensington is a specialist mortgage lender with an average rating of 4.6/5 on Trustpilot. They are known for their flexibility and often accept customers that may be rejected elsewhere. As an intermediary-only lender, they will only let you access their green product range, ‘EKo’, if you apply through a broker, like us.
EKo mortgages offer a £500 cashback reward to those purchasing a property with an EPC rating of A or B. This is available on both residential and buy-to-let, at a loan-to-value of up to 90%. Any adaptations required to raise the EPC rating to the qualifying level will need to be carried out within 12 months of the mortgage completion date.
3. Barclays
Barclays is another well-known high street bank offering green mortgages. Their ‘green home’ mortgage range is only available to residential buyers purchasing a new build home with an EPC rating of A or B, or above 81.
Also available to Barclays mortgage customers is the ‘Greener Home Reward’. This is a grant of up to £2,000 to be used for green home improvements, such as solar panels or insulation. However, they do not currently offer additional borrowing for green home improvements.
4. Leeds Building Society
Leeds Building Society is a mutual lender and one of the larger mortgage lenders among UK Building Societies. They offer a wide range of products for residential and buy-to-let borrowers, however, their green product is only available to residential borrowers.
Leeds has slightly more flexible criteria than most green lenders, with property rated as EPC A,B or C all qualifying for their green mortgage deal. They will also consider a PEA (Predicted Energy Assessment) on new build property.
5. Santander
Santander is a large UK bank offering both residential and buy-to-let mortgages and remortgages. They have recently introduced a range of green mortgage products, but these are currently only available through a broker, like ourselves, not directly to the public.
They offer preferential interest rates for customers with a property rated A or B, as well as additional borrowing with cashback available to those using this for energy efficiency improvements.
6. Dudley Building Society
Dudley Building Society offers a range of mortgages to residential customers, and can be slightly more flexible than high street banks with their criteria. They often consider niche borrowers, such as expats or those looking to build their own homes.
Their green product, ‘Energy Efficient Home Further Advance’, is exclusively for additional borrowing that’s intended to be used to improve the EPC rating of your home. They provide cashback of 0.50% to existing mortgage customers opting for this loan.
Find your ideal green mortgage lender today
Buy-to-let green mortgage lenders
There are fewer lenders offering green mortgages for buy-to-let purposes, however, there are options available. In addition to those mentioned above, such as Barclays and NatWest, there are some more niche buy-to-let lenders offering green products:
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Paragon - Green purchase mortgages are available for both portfolio and non-portfolio landlords. They also offer additional borrowing to landlords looking to make energy-efficient improvements to their private rental properties
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Foundation Home Loans - This intermediary-only buy-to-let specialist lender offers a range of green mortgage products aimed at encouraging improvements to all private rental properties. This includes purchase and remortgage deals for properties with an EPC rating of A, B, or C, and cashback to those looking to improve the energy efficiency of properties older than 10 years
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Swansea Building Society - offers green buy-to-let purchase and remortgage deals on property with an EPC rating of A or B
How to choose the right green mortgage lender
If you’re looking to secure a green mortgage, it can be helpful to have guidance from an expert on this type of product, particularly if you’re looking for a buy-to-let deal.
As whole-of-market brokers, Teito can compare green mortgage deals and lenders across the whole market, including those only accessible through an intermediary. We’ll review your needs and circumstances to ensure we find you the most competitive deal on the most suitable green mortgage for you.
Get started here to book a free, no-obligation chat with a broker who specialises in green mortgages to learn more.
FAQs
Yes, there are. Ecology Building Society is arguably the only ‘truly green’ mortgage lender, given that they are a completely ethically run company. They only offer green mortgages, however, predominantly for the purposes of self-build projects.
However, there are other self-build lenders offering green mortgage products, such as Furness Building Society and Newbury Building Society.
Choosing an Adviser
Selecting a qualified and experienced mortgage adviser is of great importance. To choose a suitable adviser, evaluate their qualifications, experience, and reputation, and ensure they are regulated by the Financial Conduct Authority (FCA).
Read reviews from previous clients and make sure they provide a clear explanation of the products and services they offer, as well as the fees and charges associated with them.