The Coronavirus lockdown has reduced the UK’s daily CO2 emissions by more than a third and environmentally conscious buyers are keen to keep them that way.
While it’s true that style is still important to first-time buyers, owning a home built with the environment in mind is a must-have for most and with some lenders offering better rates to customers buying an energy efficient new build home, going green has never looked so good.
What is a green mortgage?
Green mortgages can vary between banks and lenders though usually, this type of mortgage is offered to people buying a new build home.
You don’t necessarily have to be a first-time buyer to qualify but the property must be purchased to live in and must meet your chosen lender’s energy efficient rating criteria.
New build energy efficiency ratings explained
When a new build home is constructed and sold, it must have an Energy Performance Certificate (EPC) which gives the property an energy efficiency rating from A or 100 (most efficient) to G or 0 (least efficient.)
The criteria of lenders can differ, though some may offer lower rates to eligible customers if the property they want to purchase has an energy efficiency rating of 81 or above, or is in energy efficiency bands A or B.
New build homes will also have a Predicted Energy Assessment (PEA) before they are finished and green mortgage lenders will require you to provide this on application so they can confirm whether or not the property meets their requirements.
Why are lenders offering lower rates for energy efficient homes?
Higher expenses could impact the ability of a borrower to make their monthly mortgage payments, whereas cheaper energy bills could help hundreds of homeowners free up cash and remain in a position to repay their loan.
This is good news for lenders as reducing the likelihood of default, also reduces the likelihood that they will have to repossess and claim their money back.
What makes a New Build property energy efficient?
Built to a higher standard, using modern construction methods and energy efficient materials, the majority of new build developments feature innovative design that drives down energy prices and reduces waste. Great for your bank balance and even better for Mother Nature.
In fact, Energy Performance Certificate data suggests that 8 out of 10 new builds have the top A or B rating for energy efficiency compared to just 2.2% of existing properties. But how do they do it?
- Installing boilers that only give you hot water when you need it
- Fitting modern double glazing filled with argon gas
- Using quality insulation in the roof and walls
- Featuring sophisticated water drainage systems
For details about a development near you, ask one of our advisers who can provide you with the relevant materials and update you on the site’s progression.
Am I eligible for a green mortgage?
Your eligibility for a green mortgage, as with any mortgage product, will depend on a host of factors including your own circumstances and financial situation.
It may be the case that another lender has a better fitting mortgage agreement or that your current circumstances present some barriers to application.
What that essentially means is that some lenders can be hesitant to loan large amounts to borrowers with credit issues, low income or an unstable or unpredictable income.
In fact, there are an abundance of issues that can cause delays or rejections on a mortgage application, green or not.
That’s why talking to a mortgage broker can help.
- Your broker works on your behalf to find you the right mortgage deal, whether that be with a green mortgage lender or not.
- Your mortgage broker can assess your circumstances and advise you whether a green mortgage would be the most financially viable and suitable route of homeownership for you.
- They know the lenders that will be more likely to accept you and can assist with your application, helping to avoid any errors that might cause delays.
Could I get a mortgage to make an old house energy efficient?
Many first-time buyers in particular enjoy the ease of being able to move into a ready made home, knowing that the hard work has been completed by professionals to a high standard.
However, if you have your heart set on renovating an older property to be more energy efficient, our advisors can highlight the right lenders and provide the guidance needed to gain a successful mortgage application.
Buying a home with the wrong mortgage can affect your finances for years to come, so whatever your aspirations are for owning a home, always ask a professional to check your contract and compare your options before signing.
To find out more about green mortgages, send us a quick message.
Your home may be repossessed if you do not keep up repayments on your mortgage.