What is a ‘Green mortgage’ and how do you qualify?

on 1 December 2023

A green mortgage is a mortgage specifically for green buildings – which are buildings that are environmentally sustainable. These are known as sustainable homes, eco-friendly homes, and green homes.

A key advantage to new-build homes is the increased energy efficiency – not only do new-build homeowners save money on their energy bills, but they can also take advantage of green incentives when it comes to applying for a mortgage. This often means lower interest rates which can reduce your monthly mortgage repayment amount.

How to establish Green Home status

In order to apply for and be granted a green mortgage, you will need to establish that the property you wish to purchase meets particular environmental standards. The most straight-forward way lenders can establish that is via EPC ratings, and lenders often require an A or B rating (although some will take C ratings) to offer a green mortgage.

EPC – Energy Performance Certificates rank a property on the basis of its energy performance rating and this is a UK requirement for every home sale or rental. Of course, if you are buying a new St Arthur home, with an excellent EPC rating then this will qualify you for a green mortgage.

In short, an EPC rating is a review of a property’s energy efficiency. Every home is ranked from A-G on energy efficiency, with ‘A’ being the most efficient rating. 

Green Mortgage Lending

Lenders are recognising the value of environmentally friendly properties and are willing to incentivise your decision to go green, and many offer excellent green home mortgage rates and generous green home mortgage lending criteria generally. This includes buying an energy-efficient new build home.

Money Saving Expert explains that lenders view energy-efficient homes as less risky investments. In the era of climate change, this mindset aligns with the global push towards sustainability. Not only are you contributing to a greener future, but you’re also making a financially sound decision.

What Do You Need to Do to Qualify for a Green Mortgage?

Green mortgages generally fall into two categories: Those that reward you for living in an energy-efficient home and those that reward you for carrying out ‘green’ home improvements. Buying a St Arthur home will allow you to take advantage of a ‘green mortgage’ thanks to an excellent EPC rating.

Favourable Mortgage Interest Rates and Cashback

On top of the savings you’ll make on your energy bills each month, with a green mortgage, lenders will offer you cashback and/or a better interest rate. Note: you should always shop around for the best mortgage offer, but these deals can often beat out standard mortgage offers – plus, the cashback will certainly be a welcome bonus for your move!

Stay Tuned for More Tips and Insights

At St. Arthur Homes, we’re committed to keeping you informed about the latest trends and opportunities in homeownership. Follow us on Instagram @wearestarthur for regular updates, tips, and insights that will help you make the most of your living experience.

Remember, an energy-efficient home isn’t just good for the planet; it’s great for your wallet too! Invest wisely, live sustainably, and enjoy the rewards of a greener lifestyle with St. Arthur Homes. Also we think you might be interested in learning the costs of buying a home to help you understand the wider financial aspects.

You may also be interested in reading about the true costs of buying a home to help you on your journey to home ownership.