With an estimated 533 ‘green’ mortgages available to UK homebuyers and a drive to decarbonise residential homes, green mortgages offer considerable benefits to first time buyers looking to reduce their monthly outgoings. Natalie Daniels, Sustainability PR Director at Building Relations explains why
If you’re looking to take your first step on to the property ladder, green mortgages are helping to unlock sustainable homeownership for many more people across the country.
According to the Green Finance Institute, the UK’s green mortgage market has grown significantly in the last five years; from just four mortgages available in 2019 to more than 60 today. Many lenders offer green mortgages with lower interest rates than your standard mortgage product on the market.
What is a Green Mortgage?
So, what is a green mortgage? Put simply, it is when a lender offers a buyer preferential rates if they can demonstrate they are borrowing to buy a greener property. This may include a newly built home with high energy efficiency, solar panels or a green roof.
Benefits of Green Mortgages for First Time Buyers
For first time buyers looking to buy their first home, this will mean lower monthly repayments – and what’s not to like about that?
A green mortgage incentivises buyers and homeowners to purchase a more energy-efficient home or upgrade their existing home to reduce energy consumption and improve its energy performance certification (EPC) rating.
The added benefit to buying a more energy efficient home is that with spiking energy prices, a new and more sustainable home also means lower utility bills, allowing buyers to make extra savings. In 2023, Savills reported that 61% of new home buyers listed a good EPC rating and savings on energy bills as either their first or second reason for buying a new build home.2
Why Consider a Green Mortgage?
Green mortgages work in the same way as traditional mortgages, but are split into three main categories:
- Lower interest rates if you buy an energy-efficient home
- Cashback to buyers who purchase an energy-efficient home
- Reduced or cheaper borrowing rates to buyers who upgrade their homes
Success Stories: Georgia and Molly’s Green Mortgage Journey
For first time buyers, Georgia and Molly, purchasing their first home with a green mortgage enabled them to secure a preferential interest rate of 4.55% on a three bedroom property at David Wilson Homes Ecclesden Park in Angmering, West Sussex. Having sufficiently saved a deposit between them with no schemes or family help, the couple put down a 10% deposit of £41,500 to secure their new home.
“We started off on a high interest mortgage rate of 5.15% but after finding out we could change our rate up until the day we move in, we have secured a much lower rate of 4.55%. Applying for a green mortgage benefiitted us financially, with a better overall rate, as well as a reduction in energy bills, a new home was the best way forward for us,” Georgia said.
Conclusion
With energy efficiency becoming more important in the search for a new property, green mortgages are a great way for buyers to be rewarded when purchasing a more energy efficient home. With increased insulation, renewable sources of energy and lower monthly bills, it is evident that greener homes are the perfect place for those taking their first steps on to the property ladder.
For more information check out greenfinanceinstitute.com/products-solutions/green-mortgages/
Building Relations
Building Relations is a PR & communications company that has offices in London, Egham (Surrey) and Edinburgh specialising in property, construction and the built environment. Clients include large and small developers, housebuilders, housing associations & providers, estate, land and buying agents, construction firms and many other types of property-related companies.