Everyone seems to be talking about going green these days. So far, altering your life from cars to coffee cups. Now, that trend has come to home finance.
You’ve probably heard the term green mortgages being mentioned, but what are they? Are they just a marketing gimmick or can they really save you money? It can all be a bit confusing. In this simple guide, we’ll break it all down. We’ll cover what green mortgages are, the real pros and cons and how to figure out if one is right for you.
What is a Green Mortgage, Anyways?
A green mortgage is a home loan that rewards you for having (or creating) an energy efficient home. The key to the whole process is your home’s Energy Performance Certificate(EPC). This is the multi coloured A-G rating you see on property listings. ‘A’ is the most efficient therefore the cheapest while ‘G’ is the least efficient.
Usually, green mortgages come in two types:
For buying an efficient home: You can get a better rate or cash back if the property you’re buying already has a high EPC rating (usually ‘A’ or ‘B’). This is common with newly built homes.
For making a home greener: You can get a loan to make energy efficient upgrades (like solar panels, new insulation or a heat pump) to your existing home.
The 3 Real Benefits: Are They Worth It?
So, you know what they are. But what’s in it for you?
1. The mortgage perk
This is the most advertised benefit. Lenders may offer you a slightly better interest rate or a cash back reward when you take out a green mortgage.
2. The homeowner perk
This is a big long term win. An energy efficient home is simply cheaper to live in. Better insulation and modern heating mean lower gas and electricity bills, a saving you’ll feel every single month.
3. The investment perk
An energy efficient home isn’t just cheaper to run; it’s often more valuable. Research from Rightmove has shown that upgrading a home from an EPC rating of ‘F’ to ‘C’ can increase its value by an average of 15%, or over £55,000.
Why Your EPC Rating Matters Now More Than Ever
Beyond the savings, there’s a new, urgent reason to pay attention.The government is proposing new rules for rental properties. The current plan is to require all new tenancies to have a minimum EPC rating of ‘C’ by 2025, and all tenancies by 2028.
This means making energy upgrades to your home is nearly becoming necessary. It’s quickly becoming key for its future value and for landlords to be able to rent it out. Green mortgages can be practical tools to help fund these important upgrades.
How Do You Qualify for Green Mortgages?
This all sounds great, but what do you actually need to get one?
- It’s all about the EPC: You either need to be buying a home with an ‘A’ or ‘B’ rating or you’ll need a clear plan to improve your current home’s rating.
- Green mortgages is still mortgages: You must still meet all the standard mortgage criteria. Lenders will do all their usual checks on your income, outgoings and credit history
- You’ll need the right documentation: On top of your standard payslips and bank statements, you’ll also need to provide your home’s EPC report. Instead, if you’re planning to make upgrades, you will need clear, itemised quotes from a qualified tradesperson.
Why a Mortgage Adviser is Essential for Green Mortgages
With all these new products and rules, how do you find the right one?
The market is confusing. The best green mortgages deals from one lender might still be more expensive than the best standard deals from another making it hard to compare. This is where an independent adviser is essential. It’s their job to search the entire market, including specialist green lenders and compare all the options. They can do the maths and show you which deal actually saves you the most money in the long run.
Your Expert Guide for Green Mortgages and Much More
The market for green mortgages is confusing and the new EPC rules are a lot to take in. This is exactly where our expertise comes in. At Aura Mortgages, we are your independent mortgage advisers and protection brokers. It’s our job to be the expert, guiding you through the noise.
For us, it’s all about providing clear and practical value. This means:
- Do the calculations for you. We search the whole market to compare the best green deals against the best standard mortgage rates. We’ll show you which one actually saves you the most money in the long run.
- Help you plan for the future. We guide our buy to let clients to understand the new EPC proposals and help them build a solid financial plan.
- Support your whole journey. We’re here for all of our clients, whether you’re a first time buyer, moving home or remortgaging.
- Protect what matters. A mortgage is a huge commitment. Our job doesn’t stop at the deal. We give you expert and clear advice on Life Cover, Critical Illness Cover, and Income Protection to make sure your home and family are secure.
Local Service, National Reach
We’ve built our service to be personal and accessible. While our advisers are based in Grimsby (Katie) and Southend-on-Sea (Melissa), we provide clear, simple mortgage advice and protection services to clients all across the UK. You get the personal, trustworthy service of a local expert, with the convenience to get help no matter where you live.
Ready to Talk About Your Options?
Whether you’re curious about green mortgages, looking to remortgage, or just want to understand your options, our team is ready to help. Get in touch with us for a friendly, no-obligation chat. We can take the confusion out of the process and do the hard work for you.
Your Green Mortgage Questions Answered
Q.Do all lenders offer green mortgages?
A. No, not all of them. It’s still a growing part of the market, so not every lender offers them. This is why using an adviser is so important. We have access to a wide range of lenders, including those with specialist green products, so we can find the right deal for you.
Q. What if my home has a low EPC rating (like D or E)?
A. You still have options. We can look for specific green improvement loans that are designed to help you fund the upgrades. Or, we can simply find the best standard remortgage deal to release funds, allowing you to manage the upgrades yourself.
Q. Are these new EPC rules for landlords definitely happening?
A. These are proposals for now but they show the clear direction things are moving. For landlords, this is a huge signal and our advice is to start planning now. Making sure your property is ready for the future is a smart investment and we can help you build a financial plan to do it.