The built environment contributes around 40% of the UK’s total carbon emissions1, meaning energy efficiency is becoming an increasingly essential issue. Enter green mortgages: loans according to which a lender will offer buyers preferential rates and terms if the home they are buying meets certain energy efficiency standards, or where the borrower has committed to retrofitting their home.

On the rise

Whilst these types of mortgages have been around for several years, research from Defaqto2 suggests they only really took off in 2021, with 26 green mortgage products available on the market this year compared with just a handful a year ago. And it looks like this is just the beginning of a steep ascent, with the Climate Change Committee3 saying that all UK homes should have an energy performance certificate (EPC) rating of C or above by 2028. Currently, 19 million of the UK’s 29 million homes have a rating below this.

What types of homes qualify?

Usually, new-build homes with low EPC ratings (i.e., A or B) will qualify, but certain deals will offer incentives to those who make green home improvements. The incentive will usually be a lower rate, cashback, or a mixture of the two.

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

Sources: 1UK Green Building Council, 2021, 2Defaqto, 2021, 3Climate Change Committee, 2021

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

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