The popularity of ‘Green Mortgages’ has been increasing recently. While the determination of the ‘green’ status of a mortgage is self-explanatory, it typically involves providing lower interest rates, discounted fees, or other financial benefits for homes with better energy efficiency ratings.
The following Market Update explores the concept of Green Mortgages, a holistic overview of Green Mortgages in the UK and what reward homeowners can win by making energy-efficient upgrades to their properties.
If you are considering buying an environmentally friendly home, making your current home more energy efficient or building a green one. Identifying the right solution is challenging. At Articus we have a decade of experience in supporting High Net Worth (HNW) and overseas clients with purchasing their new homes, investment and development projects.
What is a Green Mortgage?
A Green Mortgage is a way for lenders to incentivise those who purchase energy-efficient homes or improve their current properties to enhance their energy efficiency.
Home loans of this nature are intended to enhance the desirability of properties equipped with features such as improved insulation – double glazing and draught proofing, as well as solar panels and modern central heating boilers that utilise less gas.
To date, many green mortgage lenders in the UK offer discounted interest rates to homeowners who purchase properties rated A or B on the EPC scale. The same applies to investors opting to undertake an energy-efficient development project. Some banks will offer 0% interest rate loans to undertake these improvements and charge no fees. This applies to both residential properties and buy-to let.
Sustainable Development and Incentives
Given the need for new housing stock along with the push towards becoming carbon neutral, lenders and government are increasingly looking at ways to incentivise developers and housebuilders of all sizes to produce more energy-efficient developments. An example of this is a reduction in interest rates depending on the EPC rating of the units/scheme.
This can be used for a variety of asset classes and incorporate other housing schemes/incentives. With the discounts available, this becomes a market leading development facility and can increase the developers profit per scheme, albeit with a positive outcome for the environment and our futures. Download our property development guide to find out more.
Today’s Green Mortgage landscape
- Our housing stock in the UK has some of the oldest and least energy-efficient housing inventories in Western Europe.
- 60% of the UK’s housing stock is EPC rated D or lower -research has emphasized the potential for energy efficiency improvements. The study revealed that by implementing all feasible energy improvement measures in the existing housing stock, 98% of the homes could achieve an A to C rating, leaving only 2% in band D or lower.
- The average expense of energy efficiency upgrades for a single home is roughly £8,100. However, for homes with an F or G energy efficiency rating, that figure escalates to 25,800 -according to the Nationwide Building Society study.
- Lenders – Failure of lenders to evolve their assistance for homeowners to improve energy efficiency may result in them missing their decarbonization targets—one of several reasons why brokers can anticipate an increase in Green Mortgage products and eco-friendly solutions.
- Brokers- have a crucial role in assisting borrowers in navigating the complex and nuanced landscape in terms of Green Home Finance.
How to Apply for a Green Mortgage?
Applying for a green mortgage works in the same way as for any other home loan. However, ESG (Environmental, Social and Governance) products have several Consumer Duty considerations that focus on sustainability and client are more particular regarding their needs – borrowers should look for an expert broker in order to receive the most precise advice.
Can Overseas Residents Secure a Green Mortgage?
The availability of green mortgages for overseas clients may differ based on the lender and the individual circumstances of the client. Typically, foreign national and expat clients may encounter additional conditions during their green mortgage application process.
Visit our mortgages page to learn everything you need about Articus Mortgage services and what we can assist you with.
If you would like to learn more about a specific area of the UK mortgage and insurance market, our Guides are helpful free resources for your reference.
The Outlook
As we have observed, the mortgage market is currently undergoing a period of extreme instability due to the increasing interest rates and inflation, resulting in an overall increase in home loan costs – which has also affected Green Mortgages.
However, as everyone’s situation is unique, a Green Mortgage can be less expensive than other alternatives in some instances. It is advisable to speak to a mortgage broker, such as Articus, to find out more about the best rates available and determine if a Green Mortgage is the optimal choice for you.

