Guide to Green mortgages

What are green mortgages?

Green mortgages are a special type of loan available for those purchasing (or remortgaging) an energy efficient home.
To qualify for a green mortgage the property must have a valid Energy Performance Certificate (EPC) of A or B.
All of the new homes we build achieve a minimum EPC ‘B’ rating, meaning they can potentially be purchased with a green mortgage. In contrast, less than 5% of existing properties achieve A or B ratings for energy efficiency.
“Most lenders accept a Predicted Energy Assessment (PEA) as the EPC is only produced once the property is complete. The lender requires sight of this to offer the preferential rate available on a green mortgage,” Joe explained.

There is no difference in mortgage offer validity when looking at green mortgages over a standard mortgage. Most last six months and can be extended usually for at least three months or six months, depending on the lender.

What are the advantages of a green mortgage?

The green mortgage market is growing. There are lots of green mortgage lenders including those specialising in this type of mortgage alongside well-known lenders offering green mortgage products. Navigating the difference between the various mortgage products can be tricky, but a mortgage specialist can help you find the one that’s right for you.

“Green mortgages offer a variety of benefits, including discounted mortgage interest rates, enhanced affordability and cash back,” Joe explained.

1.

Discounted mortgage rates on green mortgages: “This could be anything between 0.1% up to 0.3% depending on the lender and makes a difference to the monthly mortgage payments,” Joe said. “For example, Halifax currently have a standard product at 80% loan to value with a five-year fix at 4.69% but with their green product the interest rate drops to 4.49% and there’s the offer of £250 cashback on new build purchases.”
Example*: Two-bedroom Ashton at Orchard Place, Thornton.

• Purchase price £246,995.
• 80% LTV – Loan Amount £197,596 over 35 years
• Standard mortgage product, fixed for five years, 4.69% – monthly mortgage repayments = £959pcm.
• Green mortgage product, fixed for five years, 4.49% – monthly mortgage repayments = £934pcm.
• Difference of £1,500 over the five years plus the £250 cashback = total saving of £1,750.

2.

Enhanced affordability due to lower running costs: “Some lenders offer enhanced affordability on mortgage products for homes that are A or B rated for energy efficiency,” Joe explained. “This means that because the homeowner will be spending less on their energy bills, they should have more funds available to put towards their mortgage repayments. For example, Leeds Building Society can offer upwards of £20,000 enhanced lending. This could make a real difference to someone looking to buy a new home.”

3.

Cashback from certain lenders: “This can be upwards of £500 and is paid on completion. You could use it towards your first mortgage repayment, towards your moving costs or to buy new furniture or other essentials for your new home,” Joe said.

You can find out more about the energy-efficient features in our new homes here.

*Rates are quoted as of 07/03/2024 & are not guaranteed & are subject to change at any time.
**Your home may be repossessed if you do not keep up repayments on a mortgage or any other debt secured on it