Sustainability is understandably a key consideration for many people, with some opting to divest from unsustainable investments, while others are urging pension providers to focus on sustainability. Green mortgages are a term many homeowners and prospective buyers may well have heard of, but what does it mean?
“A ‘green’ mortgage is usually just a product that might be cheaper in some way than a ‘normal’ mortgage product,” Nick Morrey, Product Technical Manager at John Charcol explains.
“It could have a lower interest rate or a lower fee or (in the case of Nationwide) a bit of extra cashback.
“To qualify for such a product there is usually a set of criteria that often centres around what the EPC rating is for the property being lent on.”
Speaking exclusively to Express.co.uk, Mr Morrey continued: “It is a good thing that lenders are trying to reward people looking to buy more energy efficient properties but the system is somewhat flawed as the EPC ratings required tend to be A or B and the vast majority of residential properties in the UK are C or below.”
He added: “So unless people are looking at a relatively newly built property it is unlikely they would qualify.
“And the costs of retro-fitting the energy saving measures are often so high that the saving on the mortgage/energy bills means it isn’t likely to pay for itself for quite some time.”
So, what do green mortgages mean for buyers?
Nick Morrey, Product Technical Manager at John Charcol, said: “It depends on the actual deals on offer.
“Brokers are experienced in comparing and assessing which deals offer the best value over the initial product term but consumers might not find that so easy.
“It is quite possible that they could get a cheaper deal that is so much cheaper they could make a monthly contribution to a green cause that is bigger than a ‘green’ deal would have given them.
“So it pays to shop around or make your wishes clear to a broker who can recommend various options to aid the decision process.”
When getting a green mortgage, there are some things to check, however.
However, the mortgage expert said that overhands are “very unlikely nowadays”.
“Also, offering a ‘green’ mortgage doesn’t necessarily mean that a lender has a terrific carbon footprint,” he warned.
And, according to Mr Morrey, those failing to check this could be faced with an unpleasant discovery once they’re locked into a deal.
He explained: “It isn’t easy for a non-manufacturing business to be carbon-neutral but some lenders take more steps towards this than others and you might want a green deal but be borrowing from a lender with a poor approach to carbon neutrality, which you might not discover until you are tied in to them meaning they are profiting from your mortgage but not helping the planet at all.”