The building society’s green Retro-Fit Mortgage is designed to encourage borrowers to upgrade their home to a better energy efficiency rating.
Borrowers must be able to prove that any upgrades made to the property have improved the Energy Performance Certificate (EPC) by one band, to a minimum of a quite achievable E. If so, the borrower will receive an interest rate reduction reward of 0.1%.
Green savings account
Saffron has also created a green savings product, Enviro Saver, which can be opened online with a minimum deposit of £10 and a maximum balance of £500,000. The interest rate is 0.35% (annually) with an additional 0.10% donated to an environmental charity. The charity is chosen by customers from a list of nominated environmental charities, which can be changed each year.
Green finance strategy
The Government launched its Green Finance strategy to improve on climate change, the environment and sustainable development in July 2019. It set up a £5 million fund to help the financial sector develop green mortgages to encourage households to improve the energy rating of their home.
Laura Bright, product development manager at Saffron Building Society and the developer of the green products, commented: “I was made aware of the government’s green financing scheme last year. Having studied the guidelines I was keen to create green products from Saffron that can help to further enhance the government’s strategy, whilst also taking the first step to a greener future for Saffron Building Society and our loyal customers.
“Each product offers a little incentive to encourage borrowers to think of the environment, whilst giving a little something to the charities working so hard to save our planet.”
Welcome news
Matthew Fleming-Duffy, a director of independent mortgage broker and green mortgage specialist, Cherry Mortgage & Finance, welcomed Saffron’s Retro-Fit Mortgage.
He said: “It got drowned out given the understandable focus on Covid-19 in the media, but this week the UK finally got a green mortgage product that is competitively priced, widely available and fit-for-purpose. Saffron should be applauded for firmly putting green mortgages back on the agenda.
“There are millions of homes that need to become more energy efficient if the UK is going to meet its ambitious net zero emissions targets by 2050, and while the Ecology Building Society are doing their best to get the message out, we need far more lenders to embrace green mortgages.
“Saffron’s Retro-Fit Mortgage aims to encourage borrowers to make energy efficient improvements to their home. If the improvements improve the EPC rating of the property by at least one band the mortgage interest rate reduces by 0.10% for the remaining time of the two-year fixed rate.
“This is particularly competitive when you consider the interest rate on the product starts at 1.47%, is available up to 80% loan-to-value and comes with a free valuation.
“The Covid-19 pandemic has put the nation’s health firmly on the radar and so now is the perfect time for the major high street lenders to start offering green mortgages.”
Ecology Building Society
The Ecology Building Society was the trailblazer of the green mortgage back in 1981. It’s C-Change product gives a discount of between 0.25% and 1.5% off its standard variable rate (currently 4.15%) if you make energy efficient changes to your property and increase the EPC rating.
Barclays
Barclays also has a Green Home Mortgage, which you can apply for if you’re buying an energy efficient new-build property from one of its partner house builders: Barratt Homes, Bellway, Berkeley Group, Bloor Homes, Bovis Homes, Countryside Properties, Crest Nicholson, Fairview, Kier Living, Linden Homes, Miller Homes, Persimmon Homes, Redrow and Taylor Wimpey.
If the home has an energy efficiency rating of 81 or above, or is in EPC bands A or B, borrowers could get lower rates on certain fixed rate mortgages.
Nationwide’s Green Additional Borrowing
If borrowers with Nationwide Building Society want to make green home improvements, they can now access a green advanced loan.
At least half of the Green Additional Borrowing product must be used to fund sustainable enhancements, such as solar panels and boiler upgrades, traditional insulation and electric vehicle charging stations.
The loan offers rate reductions of up to 0.69% from Nationwide’s existing no fee, two and five-year fixed further advance rates. As a result, rates will start from just 1.0%, with no product fee and loans can be between £5,000 and £25,000, up to a maximum of 90% LTV.
Henry Jordan, Nationwide’s director of mortgages, commented: “It’s becoming ever clearer there is an urgent need to reduce the carbon emissions from our homes. We believe meaningful incentives are the only realistic way to help people make their homes more sustainable, which is why we launched our new Green Additional Borrowing product.”
