It’s no secret that we’re facing a climate crisis. A green mortgage is one way to take a step in the right direction for the planet. 

Green mortgages reward you for saving energy at home. That could mean buying an eco friendly home, or making energy-saving improvements to your current home. They’re also known as ‘eco-mortgages’.

What are the rewards?

Different lenders reward you for different reasons. Some lenders give you lower interest rates and larger loans when you buy an eco home – usually these are new builds designed to be super energy efficient. 

Other lenders give you lower interest rates, cashback or larger loans when you make energy-saving improvements to your current home.

What’s in it for lenders?

Lending is all about risk. Lenders offer lower rates for more energy efficient homes because they think lending on green buildings is less risky. There’s two reasons for this:

• They cost less to run: the greener your home, the lower your utility bills. The lower your utility bills, the lower the chance you’ll be strapped for cash and miss a mortgage payment.
• They’re more valuable: green buildings have what’s known as ‘green value’. They’re considered more attractive than properties with no green features and are expected to hold value more robustly, even if the property market dips. 
  

What makes a home green?

A green home is one that’s energy efficient – it uses less energy to run, and it doesn’t waste the energy it uses.

You can see how green your home is by checking its Energy Performance Certificate (EPC), which gives homes an energy efficiency rating from A to G.

Lenders generally offer green mortgages on homes with an EPC rating of A or B. New builds are more likely to be eligible because they’re built with energy efficiency in mind.

But even if you don’t live in a new build, there’s loads of improvements you can make to save energy in your home.

Are there any downsides to a green mortgage?

Although some green mortgage options are cheaper than non-green mortgages, most of the options available right now are a little more expensive. That’s even when you factor in the cashback or rate discounts you might get for doing work to your property. 

If cost is the factor that’s most important to you – or even if it’s not – it’s worth comparing any green mortgage deal to other mortgages from across the whole market. That way, you can make an informed decision about the deal that’s right for you. When you’re ready to get a mortgage, our team of impartial experts can help you think through this choice.

Which lenders are offering green mortgages?

Not many – but we expect them to get more and more popular. Right now, Saffron Building Society, Kensington, Barclays, and Nationwide are offering their own green mortgages. At Habito we can talk through if these deals are right for you, and help you get one if they are.