What Is a Green Mortgage?
A green mortgage is a mortgage product that rewards homeowners for having an energy-efficient property. Lenders offer incentives — usually a lower interest rate, cashback, or additional borrowing at reduced rates — if your home meets certain energy efficiency standards.
Most green mortgage products require your property to have an Energy Performance Certificate (EPC) rating of A, B, or C, though some lenders have slightly different criteria.
Why Do Lenders Offer Green Mortgages?
It might seem unusual for a lender to voluntarily give you a lower rate, but there's solid logic behind it. Energy-efficient homes cost less to run, which means homeowners have more disposable income and are statistically less likely to default on their mortgage payments.
There's also growing regulatory pressure on financial institutions to support the transition to net zero. By incentivising energy-efficient homes, lenders can improve their environmental credentials while also reducing their risk exposure.
What Deals Are Available?
The green mortgage market is growing rapidly, with more lenders launching products all the time. Typical incentives include:
- Rate discounts — typically 0.1% to 0.2% off the standard rate
- Cashback — some lenders offer cashback of £500 to £2,000 for energy-efficient properties
- Green additional borrowing — borrow extra at reduced rates specifically for energy efficiency improvements like solar panels, heat pumps, or insulation
- Fee-free products — some green deals waive arrangement fees
While the rate discounts might seem small, over a full mortgage term they can add up to thousands of pounds in savings.
How to Make Your Home Eligible
If your home doesn't currently have an EPC rating of C or above, there are practical steps you can take to improve it. Many of the most effective improvements are surprisingly affordable:
Loft insulation, draught-proofing, and upgrading to LED lighting are all low-cost changes that can push your rating up. More significant improvements like wall insulation, new windows, or a modern heating system will have a bigger impact but require more investment.
Some lenders will let you borrow extra on your mortgage specifically to fund these improvements, which can create a virtuous circle — you borrow to improve your EPC rating, which then qualifies you for a better mortgage rate.
Important: Your home may be repossessed if you do not keep up repayments on your mortgage. There will be a fee for mortgage advice. The actual rate available will depend on your circumstances. Think carefully before securing other debts against your home.