Green mortgages
The ‘what’ and ‘why’ of the greener option
Everyone wants to be a little kinder to the environment these days and green mortgages are part of that revolution. Eco-friendly and green options have become more than just buzz words in the last few years, they have become something many consumers look for in their products. The green agenda and a desire to do our bit for the environment has gradually moved into the mainstream. As we see more and more of the effects of global warming and our awareness grows, we are looking for more products to play their part. However, there is still a lot of misunderstanding around what a green mortgage is and what they mean to the consumer.
A green mortgage is designed to encourage people to choose an energy-efficient property. Domestic housing plays a huge part in the creating of CO2 emissions in the UK. While the majority of the Carbon Dioxide which contributes to global warming comes from industry, domestic housing produces over 20%* of the total. Clearly, this cannot be changed overnight but that doesn’t mean there is no point playing our part. Reducing the CO2 we produce is a long game, not a sprint. The thinking behind a green mortgage is to incentivise home buyers to choose a new home that meets certain criteria for low carbon emission housing. If it does this then the mortgage will attract a discount or financial incentive as a green option.
What are the practicalities and advantages of a green mortgage?
Firstly, to qualify for one you will need to prove that the house you are intending to buy hits the required benchmark for emissions. Every house that is sold or leased in the UK must have an EPC. This is the Energy Performance Certificate, and it records the energy rating for the house. You will need your new home to have an EPC rating of at least B to qualify for a green mortgage. The first thing to think about from this is that many older homes will not be able to meet this standard. New dwellings are built with the EPC in mind but older homes, a rough benchmark would be those built before the introduction of EPC regulations in 2007, may well be too low. Once you have found an A or B graded house you can use the EPC as proof and apply for a green mortgage. That doesn’t mean you should completely disregard looking for an older green home though or thinking about a remortgage. It may well be that your existing home can be upgraded, and many properties are now being brought up EPC ‘B’ standard to enhance their appeal to prospective buyers.
The incentive you receive will vary but usually, they are in the form of a cashback deal or a fixed rate lower interest mortgage. As with all mortgages, these deals fluctuate and some are better than others in the short term, for example cashback deals, or provide consistent savings over 2 – 5 years. Whatever the best deal for you, the purpose of a green mortgage is to incentivise you financially, so there will always be a nice reward for being green.
If you would like to look at what is involved with a green mortgage, why not call us and we will have a chat. As well as the potential saving on your monthly payments or a nice lump sum of cash in the bank, you will have the satisfaction of knowing that you are in a home that is, in its own way, helping the environment and is costing less for your energy bills.
Source: 2020 UK greenhouse gas emissions, provisional figures.
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