The new Green Additional Borrowing product allows homeowners who would like to make green upgrades – such as installing solar panels or air source heat pumps – to borrow up to £15,000 to make these changes.
The product comes as a two or five-year fixed term with a 0% interest rate, which is being offered to encourage more people to become energy efficient.
The loans, which will be available from 1 June, will enable up to 5,000 households with a Nationwide mortgage to borrow up to a maximum of 90% loan-to-value (LTV). Nationwide said the interest-free deal would help people who needed to take out additional borrowing to make energy efficient upgrades save up to £1,530.
The loan must be used, however, to fund non-structural, energy-efficient home improvements, such as solar panels, air source heat pump, window upgrades, boiler upgrades, cavity wall insulation, loft insulation or an electric car charging point. Members can use any local or national contractor or supplier for the work.
Henry Jordan, director of home at Nationwide Building Society, said: “Residential properties are one of the biggest causes of emissions and there is a need for more to be done by government and business to encourage households to act.
“A key barrier to making homes more energy efficient is not only the upfront costs associated with retrofitting, but also the payback period of making such changes.
“It’s clear to us that only meaningful incentives will help shift behaviour. So, by launching this latest product for up to 5,000 of the Society’s mortgage holders, we can test and understand whether offering zero per cent interest will encourage members to make the necessary green home improvements, where the costs of finance may have, until now, discouraged them.”
Will buy-to-let landlords benefit?
The move has been welcomed by brokers but many were keen to learn whether the Nationwide would make the deal available to landlords via it’s buy-to-let mortgage arm, The Mortgage Works (TMW).
Currently, the government wants all rental properties to have an EPC rating of C or above by 2028. New tenancies must reach these standards by 2025.
Hannah Bashford, director at Model Financial Solutions Limited, said: “This is a great initiative and will be a good step forward to helping to make homes greener. The amount in some cases will not cover the full cost but will provide an affordable option for part of the funding and will hopefully encourage more people to look at their options.
“Will they expand this to TMW customers to help with the landlord’s obligation to get their properties to an EPC C by 2025? That remains to be seen.”
