Green mortgages are becoming an increasingly popular amongst prospective home buyers, with more and more lenders offering energy efficient mortgage deals.
We’ve spoken to Justin Fear, Major Account Director at Meridian Mortgages, Specialist New Build Mortgage Advisers, to find out more about the financial benefits of buying an energy efficient home.
What is a Green Mortgage?
A green mortgage is a product from a lender who will offer a slightly better interest rate, or a small financial incentive for a property that is either A or B EPC rated. The idea is that lenders will reward buyers for either purchasing an efficient home, or for those who already own a home, it will encourage them to make green improvements to their property to increase the EPC rating.
On October 18th, the Government reiterated their commitment to energy efficient homes, through their funding of the Green Home Finance Accelerator, which will enable lenders and other organisations to develop new green mortgage products to support homeowners when purchasing low EPC rated homes.
This comes as part of a wider Government initiative towards ensuring as many homes as possible are rated at least EPC band C by 2035, and green mortgages will support this focus.
What is an EPC rating?
An EPC rating is an Energy Performance Certificate, that gives a property an energy efficient rating from A (most efficient) to G (least efficient). It is valid for 10 years, and is ultimately used for homeowners to understand what their monthly energy bills will look like. The EPC rating depends on the amount of energy that the house uses per m², and the level of carbon dioxide emissions given off in tonnes per year.
Most new builds now have an EPC rating of A or B, meaning that green mortgages are often a viable choice for purchasers of a newly built home, whilst existing homes are able to increase their EPC rating through home improvements to access a green mortgage product.
How could you benefit from a Green Mortgage?
For some buyers, a green mortgage will mean that a lower interest rate is an option within their mortgage package. This could mean a percentage decrease on their monthly payments, saving money in the long term. Similarly, green mortgages are only available on energy efficient homes, meaning that bills in an efficient home will be less than that of a lower rated EPC property. For those that don’t receive a lower interest rate, lenders are offering cash back incentives, contributing to the low cost association with buying a green home.
Energy Efficient Homes
At Catalyst, all our new build properties have highly rated EPC bands, with energy efficiency at the forefront of our work. Across London and the South East, our sites feature a variety of green inclusions, including our homes at Newman Place in Oxfordshire, which feature energy-efficient building fabric and insulation, low-energy lighting, solar panels, high-efficiency heating, and double-glazed windows.
At The Switch, our collection of Shared Ownership homes in South West London, the development includes PV solar panels, which turn sunlight into electricity to power lighting in communal areas. Buildings at The Switch also feature ‘green roofs’ – a grassy layer installed on the top of the roof, which supports biodiversity, creates a space for wildlife to thrive as well as other additional environmental benefits including water management and improving air quality.
The Folium is another one of our developments that features PV panels to the roofs of each block of flats, as well as an energy efficient communal heating system, which saves on running costs by having one large heat source to heat multiple homes, as opposed to individual boilers for each apartment.
See how you can start saving today, find your new home.