Go Green With Your Mortgage

Home-owners could see their mortgage rates cut, thanks to a new government-funded scheme, aiming to reduce emissions while saving you money. Green mortgages will encourage home-owners to improve their energy efficiency at home, as part of the Green Finance Strategy. Once home-owners have upgraded their energy rating in their homes, they will be offered a discounted mortgage rate.

A £5m fund has been launched by the Department for Business and Industrial Strategy (BEIS), to increase the number of ‘green mortgages’ on the market. Not only will this scheme help home-owners with lower mortgage rates, but it will also make their property more environmentally friendly.

Help for those with older houses

Currently, new builds are favoured by green mortgages because it’s much easier to make new houses more energy efficient. However, all is not lost if you have an older home. Older properties are more challenging to upgrade but BEIS has set aside a separate £10m innovation fund which is intended to retrofit older properties with minimal disruption to the home-owners.

Getting a green mortgage

Although green mortgages have been around for several years, they have not yet reached the ‘mainstream’ market. Barclays launched a green scheme last year, but it is currently limited to new builds and buyers. It is not yet available for home-owners who want to improve their current house.

The government investment will actively encourage green mortgage products, but ultimately, it will be down to the consumer and the mortgage market as to how widely available they become.

Helping you in the long run

There are two bonus points to having a green mortgage, the first being that the value of your property could increase. A more energy-efficient home is less risky for potential buyers and would, therefore, also improve things from the lenders perspective.

Another great point is that a more energy-efficient property will have, in theory, fewer outgoings, and therefore more expendable income for the home-owner. This could provide an increased financial safety net and also make it less likely for you as the home-owner to get into mortgage arrears.

The idea of a green mortgage is still relatively new, but if it plays out as intended, it will undoubtedly be an area that you want to keep a close eye on. Not only is it an excellent investment for the future but it also helps you to get your home finances sorted.