Head of Content
Mortgage Advisor & Director
What is a Green Mortgage?
A green mortgage is a mortgage that is used to finance the purchase or improvement of property that is environmentally friendly. In order to qualify for a Green Mortgage, the property must meet certain standards set by the lender.
Green mortgages are a relatively new product in the UK, but they are becoming increasingly popular as more and more borrowers look for ways to reduce their carbon footprint. There are a number of different green mortgage products available, so it is important to compare the features and benefits of each one before making a decision.
If you're interested in this type of mortgage, we would recommend speaking with an experienced mortgage adviser. At Teito, we can help you to compare green mortgage deals from a range of different lenders across the whole market and find the one that best suits your needs.
Getting started is easy, compare deals online now or call us on 01484 242424 to speak to one of our expert advisers.
What are the Benefits of a Green Mortgage?
There are many benefits to taking out a green mortgage. One of the most obvious benefits is that it helps to protect the environment. By financing the purchase or improvement of property that is environmentally friendly, you are helping to reduce the overall impact that your property has on the planet.
Another benefit is that it can save you money. Many lenders offer lower interest rates for a green mortgage product than they do for traditional mortgages. This can help to reduce the overall cost of your mortgage, making it more affordable. Energy efficient homes also tend to be cheaper to run, so you could save money on your energy bills as well.
Finally, meeting the energy performance required can also help to improve the value of your property. Because environmentally friendly properties are in high demand, they can appreciate in value at a faster rate than traditional properties. This can make green buildings a wise investment, even if you do not plan on living in the property for a long period of time.
If you are interested in taking out a green mortgage, be sure to shop around and compare rates from different lenders. You may also want to consider speaking with an experienced mortgage advisor to get more information about this type of mortgage and whether or not it is right for you.
How do I Qualify for a Green Mortgage?
Green mortgages reward energy-efficient properties with lower interest rates or a cashback incentive. In order to qualify, your property must meet certain standards set by the lender.
One of the most common standards is that the property must have an Energy Performance Certificate (EPC) rating of A or B or above. An Energy Performance Certificate (EPC) is a report that assesses the energy efficiency of a property and gives it an energy efficiency rating from A (very efficient) to G (inefficient). Many lenders will only consider properties with an Energy Performance Certificate (EPC) rating of A or B.
Many new build properties will already have an EPC rating of A or B. If your property does not have an EPC rating, you can commission one from a qualified assessor.
You will also need to have a Loan to Value (LTV) ratio of 85% or less. This means that you will need to provide a deposit of at least 15% of the property's value or have equity of at least 15% in your current home if you are remortgaging.
Finally, you will need to meet the lender's other eligibility criteria, which may vary depending on the lender and the type of mortgage product. For example, some lenders may require you to have a certain amount of income or a minimum credit score.
Green Additional Borrowing
If you already have a mortgage with a lender, you may be able to apply for additional borrowing to finance energy-efficient home improvements. This is often called a Green Additional Borrowing or a Green Remortgage and it can help you to make your home more energy efficient without increasing your monthly repayments.
To qualify, you will usually need to have a good repayment history on your current mortgage and meet the lender's other eligibility criteria. You must spend a minimum amount of the advance on energy-efficient home improvements, typically around 50%. For example, if you are borrowing £20,000, you would need to spend at least £10,000 on energy-saving home improvements.
Which Lenders Offer Green Mortgages?
A number of lenders in the UK offer green mortgages, including banks, building societies and specialist lenders. The type of mortgage product and the eligibility criteria will vary depending on the lender, so it is important to compare different deals before you apply.
Some of the UK's leading mortgage lenders and building societies that offer green mortgage products include:
Monmouthshire Building Society
Speak to an Expert
If you're interested in taking out a green mortgage, we would recommend speaking with an experienced mortgage adviser. At Teito, we can help you to compare mortgage deals from 90+ lenders across the entire market and find the one that best suits your needs.
Our team of whole-of-market mortgage advisers have a wealth of experience and knowledge when it comes to green mortgages and can provide you with expert advice on the best way to finance your energy-efficient home.
To speak to one of our advisers, simply call us on 01484 242424 or make an enquiry online.
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.
