A recent survey by David Wilson Homes found that 80% of homeowners are not aware of green mortgages and the benefits they offer.
Green Houses
The survey of 500 homeowners found that 85% would consider opting for a green mortgage if it could help reduce their monthly repayments.
David Wilson Homes spoke to Terry Higgins, mortgage expert, to help people understand green mortgages.
Higgins said: “Green mortgages are one of the most recent mortgage products being offered by many high-street lenders.
“They’re designed to reward people living in energy-efficient homes or people carrying out green home improvements, and they can come with various benefits, including cashback, lower interest rates, and potentially the ability to borrow more.”
Higgins clarified that it’s a common misconception that green mortgages are more environmentally friendly than conventional mortgages.
He said: “It’s a common misconception that green mortgages are more environmentally friendly than conventional mortgages.
“The ‘green’ in green mortgages refers to the requirements needed to qualify for a green mortgage.
“It does not mean that your mortgage lender will be investing your payments into green initiatives or schemes.”
Green mortgages come in two broad categories: Energy Performance Certificate (EPC) rated mortgages and green home improvement mortgages.
Higgins said: “Many green mortgages offer lower rates of interest to those buying or remortgaging homes with an A or B EPC rating.
“All new build houses in the UK meet A or B EPC requirements, meaning that new homes will be able to qualify for green mortgages.”
Some lenders will offer up to £1,000 cashback, while others offer improved affordability assessments, allowing homeowners to borrow more.
Higgins added: “Green home improvement mortgages are designed for buyers or remortgagers who are committed to making sustainable improvements to their homes.
“These mortgages will offer additional borrowing at a lower interest rate or access to finance for new improvements, from installing double-glazed windows, new insulation, heat pumps, or solar panels.”
Green mortgages have seen a steady increase in Google searches over the past 15 years, with around 9,000 searches per month in the past year.
Higgins said: “While green mortgages may have more exclusive requirements and offers, they may not always be the most suitable choice.
“Reduced interest rates and cashback schemes could help reduce monthly mortgage payments more than many mortgage options, but homeowners may still find cheaper deals by shopping around or speaking to a mortgage adviser.”
Article taken from The Intermediary - Written by Marvin Onumonu
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