Green Mortgages
A green mortgage is one that rewards a homeowner for buying or owning an energy-efficient home by offering them more favourable terms than come as standard.
Now, that typically means either getting a slightly lower interest rate, or cashback when a homeowner out the mortgage, or both.
For a long time, it was largely only the Ecology Building Society that was selling green mortgages, but new products have been coming to the market lately. Many of the UK’s biggest financial houses now offer products.
At the heart of all of this are energy performance certificates (EPCs). An EPC is needed whenever a property is built, sold or rented. It gives the building an energy efficiency rating from A (most efficient) to G (least efficient).
Eligibility for many of the green mortgage deals is linked to the property’s EPC rating – for example, it might need to be A or B.
NatWest offers a reduced rate on a two-year or a five-year fixed-rate mortgage, with cashback as well in some cases.
Natwest’s Green mortgage had a rate of 1.07%, with £250 cashback. To qualify, the property must have an EPC rating of A or B. At Sirius Partners, we aim from the ground up to achieve an EPC rating of A.
In April 2021, Nationwide launched its Green Reward scheme, which gives those buying a home with one of its mortgages £250 cashback if it has a B rating or £500 if the property is A-rated. So far, about 1,000 payments have been made through the scheme, with 90% of recipients getting £250.
Similarly, the Halifax offers £250 cashback where a property is rated A or B.
When it comes to our buy-to-let homeowners at Sirius Partners, landlords have a greater incentive to be green due to new regulations being introduced from 2025, with rented property needing to have a rating of C or above.