A small but growing number of mortgage lenders are offering incentives to borrowers whose homes are more eco-friendly. Here’s the lowdown on green mortgages and how to find out if you are eligible
In recent years, we’ve all come to the harsh realisation that if we don’t start taking care of our planet soon, we’re going to end up destroying it.
We’ve started transitioning to electric vehicles, we’re putting emphasis on eradicating single use plastic, and there are now ways that we can go green with our mortgages.
The team at www.onlinemortgageadvisor.co.uk have shared their knowledge and put together a go-to guide about green mortgages.
What is a green mortgage?
To put it simply, a green mortgage is a mortgage that rewards you for buying an energy-efficient home by offering the prospective homeowners more favourable mortgage terms than they would usually get.
This is often on new-build homes that are generally built to be more eco-friendly.
What makes a home green?
A green home is one that uses less energy to run the property, and the energy it does use, doesn’t go to waste. A simple way to know how eco-friendly your home is, is to look at the Energy Performance Certificate (EPC) rating which will rate your property on a scale of A to G.
If your property has a top rating of A or B, it’s likely that a mortgage lender will offer you a green mortgage.
What kind of rewards do you get?
The rewards you get for having a green mortgage will vary from lender to lender, but they will tend to be along the lines of having a lower interest rate or a larger loan to what they would usually offer.
Leeds Building Society recently announced it was offering cashback as an incentive on its Green Mortgage.
What are the downsides of a green mortgage?
Although green mortgages sound great when you consider the rewards, there are currently only a few mortgage lenders offering them.
What’s more they can tend to be a more expensive option as new build homes can sometimes sit on the more pricey end of the scale.
Why are lenders getting on board with green mortgages?
We all know that everything for mortgage lenders revolves around risk and whether it’s something they’re willing to take a gamble on.
Lenders are happy to offer lower interest rates on more energy efficient homes because they’ll believe that a green building is less risky as they often cost less to run.
Green buildings are often new build homes and have energy efficient aspects built into them, they can often be more valuable.
