In recent years, there has been a growing interest in green mortgages in the UK. Green mortgages are designed to help borrowers purchase more energy-efficient homes. This is important because energy-efficient homes use less energy, which can help to reduce greenhouse gas emissions and improve air quality.
What are the differences between a green mortgage and a standard mortgage?
- Interest rates
Green mortgages typically offer lower interest rates than standard mortgages. This is because the people who apply and meet the criteria for a green or eco mortgage are seen as being less risky by lenders, i.e. they are less likely to default on their loan. - Eligibility criteria
Green mortgages usually have more strict eligibility criteria than standard mortgages. This is because lenders want to ensure that borrowers are committed to making energy-efficiency improvements to their homes or the home they want to buy already meets certain EPC energy criteria. - Incentives
Green mortgages may offer incentives such as cashback, lower interest rates or other perks to borrowers who purchase homes with high EPC ratings. These incentives are designed to encourage borrowers to choose more energy-efficient homes. - Purpose
Green mortgages are designed to help borrowers purchase more energy-efficient homes. This is important because energy-efficient homes use less energy, which can help to reduce greenhouse gas emissions and improve air quality. However, critics have described these schemes as partial ‘greenwashing’ by the financial services industry.
It’s not easy being green, but it does help if you’re buy-to-let loaded already… or buying a glorified shed!
Let’s be honest. These mortgage products are aimed squarely at the bourgeois hippies. For example:
- The amount of money borrowed
Green mortgages typically offer lower interest rates to homeowners who borrow less money - The length of the mortgage term
Green mortgages typically offer shorter mortgage terms, which can save you money in the long run if you’ve got the doh-ray-me boy to buy half the gaff already!
Time to eat the peach: The best & worst green mortgage providers
Best
- Ecology
Ecology is the UK’s leading green mortgage lender. They offer a range of mortgages to homeowners and landlords, with a focus on energy efficiency. Ecology’s mortgages are accredited by the Green Finance Initiative, which means they meet strict environmental standards. To be honest, scrub the also rans, if you meet the criteria you need look no further… and we are not sponsored by them! - Nationwide
Britain’s high street building society has a green mortgage that offers a preferential interest rate to homeowners who buy a property with an EPC rating of A or B. - Barclays
Lowest of ‘the best’ Barclays, offers a preferential interest rate to homeowners who buy a new-build property with an EPC rating of A or B. This stinks of a possible closed-shop double-bubble wheeze by Barclays in our opinion, but for legal reasons we are almost certainly wrong on that assumption.
Worst
Take a standard financial product and stick it in the wash with a green dye pack and what do you get… allegedly!
- Halifax
The Halifax does not offer any preferential interest rates (even for Howard), but does offer the middle-class smug factor. - NatWest
NatWest is yet another major high street lender that offers err… no preferential interest rates, but dinner party bragging rights. - Virgin Money
Trust everyone’s favourite roll-neck aran-jumpered nice-guy-image-bread-head-nhs-sueing-hippie capitalist to get in on the the action. Again, Virgin Money does not offer any preferential interest rates.
So there you go. We bet you’re not used to reading an article like that. If you are considering a green mortgage, it is important to remember we’re far from being financial advisors, we’re just a site on the interweb. Go an see a professional FA to really get the lowdown and some serious personalised advice. Yes, really. Some things you just can’t skimp on.
