Answers · UK 2025/26

What is an energy efficient mortgage discount and how much could I save?

An energy efficient mortgage discount is a reduced interest rate offered by some lenders on mortgages for homes with strong Energy Performance Certificate (EPC) ratings, or for borrowing used to fund energy efficiency home improvements. The exact saving varies by lender and product, but is typically a modest reduction in interest rate (often a fraction of a percentage point) rather than a dramatic difference, so it should be weighed alongside the overall deal, not treated as the only factor in your mortgage choice.

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Energy efficient mortgage discounts sit within the broader "green mortgage" category, and understanding how the discount is actually applied helps you judge whether it is worth prioritising. **How the discount is typically structured** Lenders offering an energy efficient mortgage discount usually apply a small reduction to their standard interest rate -- often a fraction of a percentage point -- for properties meeting a set EPC threshold, most commonly a rating of A or B. Some lenders instead offer a cashback payment rather than, or in addition to, a rate reduction. **Why the discount is usually modest, not dramatic** Because the discount needs to reflect a genuine, sustainable difference in risk or cost to the lender, rather than simply being a marketing incentive, the actual rate reduction is often relatively small in percentage terms -- worth having, but rarely large enough on its own to outweigh choosing the mortgage with the most competitive overall rate and fees across the whole market. **How to estimate the pound saving** The actual monetary saving depends on your mortgage size, the size of the rate discount, and the length of your mortgage deal -- even a modest rate reduction can add up to a meaningful amount over a two or five-year fixed deal on a large mortgage balance, so it is worth calculating the actual pound figure rather than judging the discount by the headline percentage alone. **Combining the mortgage discount with lower running costs** Beyond the mortgage rate discount itself, an energy-efficient home also typically has lower ongoing energy bills, which is a separate and often larger financial benefit over time -- when comparing an energy-efficient property against a less efficient one, it is worth factoring in both the potential mortgage discount and the likely difference in ongoing energy costs. **Improving your EPC rating to qualify** If your current home does not yet qualify for an energy efficient mortgage discount, some lenders offer additional borrowing specifically to fund improvements (such as insulation, double glazing, or a heat pump) that could raise your EPC rating over time, potentially qualifying you for a better rate discount on a future remortgage. **Worked example** A borrower with a £250,000 mortgage secures an energy efficient mortgage discount of 0.10 percentage points because their home has an EPC rating of A. Over a five-year fixed deal, this modest rate reduction results in a real, if relatively modest, total interest saving compared with the lender's standard rate for the same deal. **Practical tip** Use the Mortgage calculator to compare the total cost of a green mortgage discount against the lender's standard rate and against competing lenders' best overall rates, since the most competitive deal overall does not always come from the lender offering the green discount.