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
You can get lower interest rates with a green mortgage
You can benefit from cashback when you complete your mortgage, designed to be used for home improvements
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
You may need to carry out expensive improvements to be eligible
They’re only available on properties with very good EPC ratings, so your options will be limited when buying a new home
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.”
Green mortgages FAQs
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.