Could a Green Mortgage Save You Money?

Jumping straight to the conclusion, the answer is yes: a green mortgage can be uniquely cost-effective. As can living in an energy-efficient home, where all possible efforts are made to minimise energy consumption.

Qualifying for a green mortgage means meeting certain eco-friendly criteria, either before buying the property or after moving in. Green mortgages are primarily issued for the purchase of energy-efficient homes, but incentives are also available for buyers who commit to improving the eco-friendliness of their properties within the first 12 months following their purchase.

The benefits of living in a green home

Along with preferential mortgage rates and lower overall borrowing costs, there are additional perks to living in a green home.

For example, energy consumption is significantly reduced in a green household, leading to lower energy bills. A green home will almost always be significantly cheaper to run, adding up to generous and continuous savings.

In addition, the market value of a green home is almost always higher than that of a comparable ‘brown’ home. This therefore means that most energy-efficient upgrades and improvements will almost always pay for themselves long-term.

It can also be far easier to obtain a mortgage for a green home than a conventional home, as lenders are increasingly showing preference to buyers setting their sights on energy-efficient properties.

How can I get a property to meet green mortgage criteria?

If your goal is to get your property up to scratch to meet official ‘green’ criteria, it can be done in a variety of ways. In fact, any improvements you make that help reduce your home’s overall energy consumption could help.

Examples of cost-effective yet highly efficient ways to boost energy efficiency include the following:

• Properly sealing windows and doors to eliminate drafts
• Upgrading to more energy-efficient lighting
• Insulating walls and attics or improving existing insulation
• Adding smart devices and controllers to reduce energy consumption
• Stepping up to better double or triple-glazed windows
• Central heating system upgrades
• Installation of renewable energy sources, like solar panels

On average, it is estimated that upgrading a property in the UK from an EPC rating of D to C would cost around £6,000. For a larger detached property, the cost increases to around £12,000.

But these are still the kinds of costs that could be augmented long-term by switching to a green mortgage. Or perhaps with the contribution they make to the market value of the property when it is put up for sale.

Independent broker support

There are numerous factors to consider and calculations to perform when establishing the cost-effectiveness of green home improvements. Examples of this include the size, specification, and value of the property in question, your outstanding mortgage balance, the specific renovations required, and your general financial circumstances.

This is where independent broker support can prove invaluable, enabling you to build a clearer picture of the options available. Making efforts to run a more energy-efficient home is always advisable and could prove more financially beneficial in some instances than others.