Green Mortgages

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Green Mortgages

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“Just like anything that is going to fix global climate change and all of the problems we face. It takes us all to do our bit” – Sarah Tucker

About this episode…

Green Mortgages has definitely become a bit of a buzzword in the market. It’s all I’m being asked about, as well as being booked for webinars to talk about it. I wanted to create a podcast episode about Green Mortgages, so that you can learn what it is, how it relates to you and decide if you want a green mortgage in the future.

Read on for a summary or listen in above for the full episode…

What are Green Mortgages?

Green Mortgages, in essence, are when lenders reward you for buying, owning, or making improvements to your property to make it more energy efficient.

Lots of homes in the UK are inefficient to heat, meaning they have high energy bills and they leave a big carbon footprint. The UK has one of the oldest and worst insulated properties in Europe, so there’s a lot of work that the UK needs to do to be more energy efficient in their homes. And Green Mortgages is just one of the incentives that they’re trying to do, to get us all thinking about how we can make our properties more energy efficient.

What is an EPC (Energy Performance Certificate) rating?

If you’ve bought a property since 2008, or you’ve marketed a property since that time, you should get an EPC (Energy Performance Certificate) as standard. Some of us don’t even know what our EPC rating is, let alone how to find it out! Fear no more! You can find it out online. There is an EPC register…

If you do have an EPC certificate, it’s valid for 10 years, but if you’re like me, I renovated my property since that EPC certificate had been done and the rating will now definitely be wrong because I’ve had my loft extension done, we’ve had the windows replaced, we’ve had the back extended, so I know our home is more energy efficient than the EPC rating would lead you to believe. If you do want to upgrade your EPC rating, you can, and it will cost you around £60 to £120.

Can you get a better mortgage rate depending on your EPC rating?

Your EPC rating could give you access to much better rates. There are 25% of lenders offering Green Mortgages, but many others are planning to, so there’ll be more and more Green Mortgages coming. Currently the biggest thing is there’s a lack of uptake and I don’t know if that’s because not enough people know about them.

So what is the incentive to get a Green Mortgage?

If your property has got an EPC rating of A, B, or sometimes C, you can potentially get a cheaper rate or cash back, or there’s other incentives such as a free valuation. The incentives aren’t huge and one of the negative feedback is that for developers and landlords, it’s actually just not worth their money to spend what they need to spend to get their EPC rating up, to then get a green mortgage. It doesn’t stack up commercially for them.

So the feedback I’ve had from a lot of developers is that they need to make it more of an incentive. Obviously, the heart-led incentive is for us to improve our planet and to save our planet. Every small thing that we can all do is going to help. The mortgage market is just trying to shine a light on it, but there’s a lot of work to still do.

If your EPC rating is low, how can you make your property better, in terms of efficiency?

The main big things that you can do is insulation, draft proofing, improving your heating and lighting – LED bulbs.

The first thing they say is add wall insulation because walls lose a third of heat, then floor insulation,  then your roof and your loft, and then upgrade your windows and doors.

These things cost quite a bit of money. When it comes to solar panels, for example, they cost between £2,500-£8,000 to install and yes, they do improve your heating bills and your energy bills, but lots of people say it takes between 10 and 25 years before you see your money, let alone make money.

You might be somebody that’s very passionate about being energy efficient, but there’s lots of people, sadly, that aren’t, and therefore the costs of these upgrades can be off-putting.

There are ways to improve the energy efficiency in your home without spending a lot of money.

You can just seal your windows for example. Plus, look at what bulbs you’re using, and replace them with LED bulbs. Finally, upgrading your boiler and installing solar panels. You can also do things like scheduling time to bleed your radiators, as that can make a difference. Make sure you turn your lights off and turn down your thermostat when leaving the room too. These are just a few things you can do.

Now, if you’ve got your EPC certificate, it does actually tell you some advice and the order in which they would encourage you to take action to improve the energy efficiency in your home. However, this episode is about raising awareness of Green Mortgages…

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What about if your EPC rating is E or above?

We are seeing clients struggle to get mortgages. So there is an element here where you will eventually have to look at this, even if you turn a blind eye to it right now you will need to make space and time to do that.  There’s lots of places where you can book somebody to carry out an EPC inspection on your home.

Take a look at the Green Finance Institute

This is an amazing website that gives you really up to date information about Green Mortgages and all of the other initiatives taking place. It talks about something called a green mortgage hub, which they’ve just launched and it’s an online resource that collates publicly available information on UK Green Mortgages into a table alongside loads of articles, reports, tools etc related to the green mortgage market. It has a table of all the lenders. It shows you when they launched their green products, it shows you the features of the product, what they’re giving you, whether it’s cash back, whether it’s a lower interest rate and the types of properties that they do it on. So it’s a really good resource.

And this is the type of thing I’m sure we’re going to see more and more of now. The UK climate change committee has actually estimated that £250 billion needs to be invested in UK home upgrades by 2050. They’ve also said for new build properties that they need to be built in a certain way, and for landlords, I think it’s 2025, their EPC rating needs to be high enough. So there’s a lot of work that needs to be done, and there’s a lot of pressure to do it in time.

Green Mortgages can contribute to climate change

Green Mortgages is a mortgage product that offers an incentive to help you make your home more energy efficient. It will potentially give you cash back or a lower interest rate. You need your EPC certificate A or B to apply and at the moment there’s a lack of uptake.

So if you didn’t know about it before, then do tell others about it (give this link or podcast episode a share)  because anything that is going to help fix global climate change and all of the problems we face, it takes us all to do our bit.  And if everybody does our bit, literally we can change the world.

I personally feel lenders do need to think about ways that they can make this more appealing to people. The initial incentives are great and obviously it’s nice to have a lower rate. It’s nice to have cash back but it’s not incentivising people enough to spend the money needed.

Perhaps there’s something bigger that they can do, like planting trees, or other schemes that they can dedicate funds to?

But we all have a duty of care to our planet, so we all need to do our part.

I hope this has been helpful. If you have any questions regarding Green Mortgages or would like help with your next mortgage then please get in touch via our website or on our social media.

Please also read our article on Zero Carbon Homes to see how you can improve energy efficiently in your home.

Exciting news!

We are thrilled to have won a Natwest Local Hero Mortgage Award!

Natwest are recognising mortgage brokers in the industry who have gone beyond everyday expectations to put the customer and their local community at the heart of their business. Businesses were asked to demonstrate their position as a local mortgage and protection expert, their commitment to quality advice, excellent customer outcomes, and their positive contributions using the key areas of environment, inclusivity, wellbeing, charity and community.

We are so proud to be a winner and part of something which focuses and celebrates the areas of our business which mean the most to us – our team, our customers and our community.

Green Mortgages

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September 18, 2023