What is a green mortgage, and does it really get a better interest rate?

Full answer

Green mortgages are a growing category of mortgage product, offered by a number of UK lenders, that reward borrowers buying or owning a property with strong energy efficiency credentials — most commonly properties with an Energy Performance Certificate (EPC) rating of A or B, though a few products extend to C-rated homes. The incentive typically takes the form of a slightly lower interest rate than the lender's standard equivalent product, a cashback payment on completion, or occasionally a small increase in the maximum loan-to-income multiple available. The scale of the discount varies by lender and has generally been modest — often in the region of 0.05 to 0.2 percentage points off the headline rate — meaning the total saving over a typical mortgage term, while real, is usually not the primary reason to choose a lender; the underlying rate and product features still matter more for most borrowers. Separately, some lenders offer "green further advance" products, letting existing homeowners borrow additional money specifically to fund energy efficiency retrofits — such as loft or wall insulation, solar panels, heat pumps or double glazing — sometimes at a discounted rate compared with the lender's standard further advance or remortgage rates. Eligibility is verified using the property's existing EPC (a legal requirement when a home is built, sold, or rented out in England and Wales, valid for 10 years) or, for retrofit products, a before-and-after EPC comparison. Because government policy continues to push towards higher minimum EPC standards for the housing stock (particularly for rented property), and there is emerging evidence some lenders may eventually price in a "green premium" or "brown discount" more explicitly as regulatory requirements tighten, homeowners considering major energy efficiency works may find it increasingly worth checking green mortgage or green further advance options specifically, rather than assuming a standard remortgage or loan is the only route to fund the works.

Try the calculator