How green mortgages work

In the UK, around 85% of all mortgages are intermediated by a broker, and this rate continues to rise.

Research by Lloyds Banking Group found that 68% of homeowners and 87% of landlords want support from their bank or mortgage advisor to retrofit their home. To meet this demand, brokers are either able to lend for green home improvements under existing home improvement finance, or a specific green mortgage product can be used. 

A green mortgage is a mortgage specifically gearer towards eco-friendly properties. To incentivise the borrower to either buy a green home or to renovate an existing one, the lender offers them a mortgage at either lower interest rate or for a higher borrowing amount.

Green mortgages make energy efficient homes more enticing by offering better rates, as well as making funding green home improvements easier. Due to the lower ongoing running costs, lenders are able to confidently lend more on greener homes, or give a better rate. Some lenders also offer cashback schemes, which pay up to £1000 for homeowners who are improving a property’s energy efficiency.