Green mortgages

Find out how green mortgages work and if you could be eligible.

What is a green mortgage?

Green mortgages are a type of mortgage deal that rewards you for buying an energy-efficient home. The rewards or incentives you can get will depend on the lender, but typically they include:

  • Lower interest rates

  • Cashback on completion of your mortgage

  • Additional funds for green home improvements

They are designed to encourage you to consider an energy-efficient home when you’re buying. Most homes that qualify will be new properties built to meet specific energy-saving criteria or homes that have been renovated to high energy efficiency standards.

How do I qualify for a green mortgage?

You can only get a green mortgage if you’re buying or remortgaging a property that is considered energy-efficient or eco-friendly by the mortgage provider.

The exact eligibility criteria will differ depending on the lender, but the main factor will be the property's energy performance certificate (EPC) rating.

To be eligible for a green mortgage, the property will usually need to be in EPC category A or B or have a rating of more than 80.

What is an EPC rating?

An energy performance certificate is a document that assesses the energy efficiency of a property. Every property must have an EPC when it is built, sold or rented out in the UK.

The certificate provides information about the property’s energy use and typical energy costs, as well as including recommendations on how you can improve its efficiency. 

Properties are graded on a scale of A to G based on things like insulation, heating systems, lighting, and renewable energy sources. EPCs are valid for ten years unless significant changes have taken place that have affected the property’s energy efficiency.

Are green mortgages cheaper?

Getting a green mortgage means you can access incentives such as better interest rates or cashback, which can make them a cheaper option.

However, because only a relatively small number of lenders offer green mortgages, it may be possible to find a cheaper deal elsewhere. It’s worth shopping around or speaking to a mortgage broker to find the best deal for you.

There are still other long-term advantages to buying an energy-efficient home. Not only will it mean lower monthly energy costs, but it could help you access lower remortgage rates in the future, especially if green mortgages become more common.

Should I get a green mortgage?

Green mortgages come with several benefits, but remember, you need to purchase a property with an excellent EPC rating to be eligible. 

If you’re remortgaging and want a green mortgage, you will need to make sure your property meets the criteria. If you have carried out energy-efficiency improvements, you may need to get a new EPC to reflect the changes you have made.

Even if you are buying a property eligible for a green mortgage, that doesn’t mean it is the right deal. Only a few lenders offer green mortgages, so it’s worth looking at all your options to find a mortgage deal that works for you.

Pros and cons of green mortgages

Pros of green mortgages

Better rates

You can get lower interest rates with a green mortgage

Cashback

You can benefit from cashback when you complete your mortgage, designed to be used for home improvements

Incentive

They can be a good incentive to make your home more energy-efficient

Save on energy bills

By having a green mortgage and an energy-efficient home, you will save money on your energy bills, and it will benefit the environment

Cons of green mortgages

Might not be cheapest

You may be able to get better rates with a non-green mortgage

Expensive improvements

You may need to carry out expensive improvements to be eligible

Limited choice

They’re only available on properties with very good EPC ratings, so your options will be limited when buying a new home

Extra documentation

You’ll need to provide extra documentation to prove your property’s energy efficiency

Our expert says...

“Green mortgages can be a good option if you're buying an energy-efficient home - but they’re not always the cheapest deal.

Having an energy-efficient home has many advantages, including lower energy bills and potentially better interest rates on your mortgage. Speak to one of our expert brokers, who can search the market to find the right mortgage for you.”

Jon Bone \ CeMAP-qualified

Green mortgages FAQs

The UK government launched a Green Finance Strategy in 2019, which included a £5 million fund to help the financial sector develop green finance products, including green mortgages.

Lenders also see green properties and eco-conscious borrowers as lower-risk investments. This is partly because energy-efficient properties are cheaper to run, so your energy bills will be lower. Saving money on energy bills should make it easier for you to afford your mortgage repayments.

Energy-efficient properties are also considered low risk because they are more likely to hold their value and less likely to need major improvements to improve their efficiency in the future.

It is possible to remortgage to a green mortgage, but your property will need to meet the eligibility criteria. This usually means having an EPC rating of A or B or a score of over 80. 

If your current EPC rating is lower than this and you have recently made improvements, you should get a new EPC to reflect the changes and update your rating. 

If you haven’t made any energy-efficient improvements to your home, it’s unlikely you’ll be able to switch to a green mortgage.

Here are a few ways you can improve your home to boost your EPC rating:

  • Upgrade loft insulation and install cavity wall insulation

  • Replace old boilers with high-efficiency condensing boilers

  • Install renewable heating systems like heat pumps or solar thermal panels

  • Install double or triple-glazed windows

  • Replace traditional bulbs with energy-saving LED lights

  • Install solar panels to generate renewable electricity

  • Seal gaps around doors, windows, and pipes

  • Upgrade appliances with more energy-efficient models

These improvements can vary in cost and complexity, so it's worth working out which changes are most practical for your property.

Other than the property you are buying, there is nothing specifically green about most green mortgages. 

Green mortgages are designed to encourage people to buy energy-efficient homes, but that doesn’t mean the lenders that offer them are supporting or investing in environmentally conscious schemes or programs.

Several lenders offer green buy-to-let mortgages with lower interest rates when buying an energy-efficient rental property.

Like residential properties, the property you’re buying must have an EPC rating of at least category A or B or over 80. 

Legislation that was due to come into effect in 2025 would have required all rental properties to have an EPC rating of C or above. Although this has now been scrapped, it shows the importance of energy efficiency in the future.

Mortgage Calculator

Calculate what you could borrow using our simple mortgage calculator.

Mortgage Rates

See the latest fixed, variable, and interest-only mortgage rates from 100+ lenders.

Get a Mortgage in Principle

Get your free Mortgage in Principle to show estate agents you're a serious buyer.

What people are saying about Better.co.uk...

 
 
 
 

Important info & marketing claims

You may have to pay an early repayment charge to your existing lender if you remortgage. Your savings will depend on personal circumstances.

Your home may be repossessed if you do not keep up repayments on your mortgage.

*The savings figure of £506 is based on Better.co.uk remortgage customers in December 2023. Read more on our marketing claims page.

We can't always guarantee we will be able to help you with your mortgage application depending on your credit history and circumstances.

Average mortgage decision and approval times are based on Better.co.uk's historic data for lenders we submit applications to.

Tracker rates are identified after comparing over 12,000 mortgage products from over 100 mortgage lenders.

As of January 2023, Better.co.uk has access to over 100 lenders. This number is subject to change.

For buy-to-let landlords, there's no guarantee that it will be possible to arrange continuous letting of a property, nor that rental income will be sufficient to meet the cost of the mortgage.