If your home is energy-efficient, you may be able to get a cheaper mortgage than someone in a draughty older property — and more lenders are offering exactly that. Green mortgages reward energy efficiency with better rates or added incentives, and as the market grows they are worth understanding whether you are buying, remortgaging or improving your home.

What a green mortgage is

A green mortgage is a mortgage that offers a benefit — usually a lower interest rate, sometimes cashback — for a property that meets a certain energy-efficiency standard. In practice, that standard is normally an Energy Performance Certificate (EPC) rating of A or B. The lender’s logic is straightforward: an efficient home is cheaper to run, so the owner has more spare income and is a marginally lower risk.

Which homes qualify

The most common route is a new-build, since modern homes are built to high efficiency standards and typically achieve an A or B EPC rating easily. But green mortgages are not only for new builds. An older property that has been improved — insulation, an efficient boiler or heat pump, solar panels — may also reach the required rating and qualify.

The EPC is the key document. If you do not know your property’s rating, it is worth checking, because it determines whether the green options are open to you.

Green improvement incentives

Some lenders go a step further and offer additional borrowing or cashback specifically to fund energy-efficiency improvements — money to insulate, upgrade heating or install renewables, with the aim of raising the property’s rating. If you are planning to make your home more efficient anyway, this kind of product can help fund the work on favourable terms.

Is a green mortgage the best deal?

Not automatically. A green mortgage is one option among many, and the headline “green” rate is not always the cheapest overall once fees and terms are compared. The right mortgage depends on your whole picture, not one feature. We compare green products against the wider market to see whether the green route genuinely gives you the most suitable deal, or whether a conventional mortgage works out better for you.

If your home is efficient — or about to be — it is worth finding out whether a green mortgage could save you money. Get in touch for advice on the options available