Updated: February 24, 2022

Eco Mortgages

Looking for an eco mortgage or trying to make your home greener to get a mortgage? Our expert guide will tell you how to finance these types of properties!

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Pete Mugleston

Author: Pete Mugleston - Mortgage Expert

Updated: February 24, 2022

If you’ve got your heart set on buying an eco home, or want to make a few improvements to your current property to turn it into a sustainable, eco-friendly bolthole, you may be wondering how it could impact your mortgage choices.

Whilst it can sometimes be difficult to source specialist eco mortgages for these kinds of properties, it certainly isn’t impossible. This guide will tell you everything you need to know about eco mortgages, what the eligibility requirements are and how to find the experts who can help.

Can you get an ‘eco-friendly’ mortgage?

Yes, but they’re something of a niche product and aren’t always easy to find. Not all lenders will operate in this space, particularly in the case of self-built properties, for the simple reason that eco homes can often be placed in the non-standard construction category, with the key components of such builds (timber, metal, glass etc.) making them markedly different to homes of standard construction.

That said, a growing number of green mortgages are becoming available for properties that are eco-friendly rather than non-standard, which means those who are just testing the waters will have little to worry about.

Simply installing solar panels, for example, won’t be enough to class your home as non-standard, in which case you may not even need an eco mortgage and can instead go down the mainstream route (though if your home is energy-efficient enough, you may want to seek a green mortgage by choice, as lenders can sometimes offer lower rates).

It all comes down to your own unique situation and what you’re looking for, which is why it can help to speak to an expert in eco-friendly mortgages right from the outset so you know what to expect.

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What makes a home an eco home?

At its heart, an eco home is a property specifically designed to minimise its impact on the environment.

In comparison with a standard home these types of properties typically have:

  • Lower carbon footprints
  • Reduced energy needs
  • Often built from sustainable materials
  • Powered by renewable energy sources and come with a high level of insulation

It’s all about being as energy-efficient and eco-friendly as possible, whether you’re installing solar panels or designing your eco home from the ground up. The latter means you can really go to town on your design.

Common materials used include; timber frames, glass, metal and recycled plastic. Some homeowners look at the full lifecycle of the materials used and even how they can carbon offset the build to make it as sustainable as possible.

But you don’t have to go that far to have an eco-friendly property. Anything you can do to boost its green credentials can make a difference, but it can also have an impact on the kind of mortgage you’ll be offered.

Eligibility and deposit requirements

You’ll likely need to meet strict criteria in order to be eligible for an eco mortgage. Many lenders stipulate that the property must achieve an energy performance rating of A or B, and you’ll need a valid Energy Performance Certificate (EPC) to prove it.

This could make things difficult for those who haven’t yet built their home and need a mortgage to fund the project, with predicted energy efficiency ratings not always accepted. Some lenders even stipulate that the property must be new build, while others will accept older properties that have had the necessary energy efficiency improvements.

Deposit considerations can be different, too. While most lenders will offer standard mortgages at up to 95% of the property’s value (or even 100% in the case of guarantor mortgages), you may need a larger deposit for an eco home, with some lenders expecting at least 20-30% of the property’s value upfront.

Though this isn’t always the case, with some lenders able to accept applications from those with a smaller deposit.

How a broker can help you

An experienced broker can be invaluable in any mortgage search, but they come into their own when the buyer has specialist needs – and seeking an eco-friendly mortgage certainly fits that scenario.

A broker with experience in this area will already know the lenders who are able to offer eco mortgages and the criteria they set, improving your chances of being accepted. This will save you a lot of time by avoiding any approach to a lender who simply can’t help with this type of mortgage.

The advisors we work with will be able to scour the market and find the best deal that meets your needs. If you get in touch we can arrange for an eco mortgage specialist to contact you straight away.

Lenders who offer these mortgages

Although not many mainstream lenders are able to offer green mortgages, there are a few that can accommodate – Barclays, for example, can consider eco mortgage applications, as can:

  • Virgin Money
  • NatWest
  • Halifax

In addition, there are quite a few specialist lenders available, many of whom will be better placed to offer this type of lending. This is why it’s best to speak with a broker before considering any direct approach to a lender.

By doing this you’ll have a far better understanding of what each lender expects before you apply.

Making a home greener to get an eco mortgage

While some may opt to go down the self-build route, others want to turn a property they already love into a more eco-friendly version, and luckily there are plenty of ways to do just that.

Such as:

  • Using renewable energy sources.
    This is likely the first thing a lot of people think of when it comes to going green, with things like installing solar panels or heat pumps growing in popularity. These can offer a simple way to reduce your carbon footprint and for many can be the first step to having an energy-efficient home.
  • Insulating effectively.
    Insulating your home as much as possible can be a great way to improve thermal performance and reduce energy consumption, and there are a lot of sustainable materials that can be used to achieve the desired result, such as sheep’s wool and cork, instead of more traditional options.
  • Double-glazing.
    If you’ve got an older property that still has single-pane windows, replacing everything with double glazing – or even triple glazing – can have a significant impact. Other methods of draught-proofing should also be considered, particularly for older houses.
  • Go smart.
    Smart technology is rapidly evolving, and you can use it to great effect to create an eco-friendly home. Things like smart thermostats that regulate your home’s temperature can be a simple way to keep your bills in check, and smart lighting systems can turn off lights that you’ve forgotten about or can be programmed to suit your routine. Speaking of lights, make sure to opt for LED bulbs for maximum efficiency.

Any one of these techniques could be a great way to improve the efficiency of your home, and could mean you become eligible for a greener mortgage.

Getting an eco mortgage on a self-build property

A lot of truly eco-friendly homes are designed and built by the occupants, though this can add another layer of complexity to your mortgage hunt.

Self-build mortgages are already a specialist product with few mainstream lenders able to accept such applications, and if that property is non-standard it can be even more difficult. That said, there are a few lenders that can accommodate self-built eco-friendly mortgages.

Rather than waste time trying to hunt them down directly, speak to a broker who already knows where to look.

Get matched with an expert in eco mortgages

Looking for a broker to help? Get in touch with Online Money Advisor and we’ll match you with an expert in eco mortgages who can source the deal that’s right for you.

Call 0808 189 0463 or make an enquiry to get started, with no fee and no obligation.

FAQs

Can I get an eco mortgage on a buy-to-let property?

Yes, though you may be more restricted in terms of who will offer you a deal. Even lenders who accept green mortgage applications won’t always be willing to lend on an environmentally friendly buy-to-let, with most restricting their eco mortgage deals to residential properties. You’ll likely need to speak to specialist lenders, which makes the expertise of a broker even more invaluable.

Could a green mortgage save me money?

Eco-friendly homes are undoubtedly growing in popularity, and homeowners can often be rewarded with more than lower energy bills. Indeed, some lenders who operate in this space offer lower mortgage rates to those with energy-efficient homes, while others offer cashback incentives, so it really can pay to go green.

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We know everyone's circumstances are different, that's why we work with mortgage brokers who are experts in all different Property Types. Ask us a question and we'll get the best expert to help.

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Pete Mugleston

Pete Mugleston

Mortgage Expert

About the author

Pete, an expert in all things mortgages, cut his teeth right in the middle of the credit crunch. With plenty of people needing help and few mortgage providers lending, Pete found great success in going the extra mile to find mortgages for people whom many others considered lost causes. The experience he gained, coupled with his love of helping people reach their goals, led him to establish Online Mortgage Advisor, with one clear vision – to help as many customers as possible get the right advice, regardless of need or background.

Pete’s presence in the industry as the ‘go-to’ for specialist finance continues to grow, and he is regularly cited in and writes for both local and national press, as well as trade publications, with a regular column in Mortgage Introducer and being the exclusive mortgage expert for LOVEMoney. Pete also writes for OMA of course!

FCA Disclaimer

*Based on our research, the content contained in this article is accurate as of the most recent time of writing. Lender criteria and policies change regularly so speak to one of the advisors we work with to confirm the most accurate up to date information. The information on the site is not tailored advice to each individual reader, and as such does not constitute financial advice. All advisors working with us are fully qualified to provide mortgage advice and work only for firms that are authorised and regulated by the Financial Conduct Authority. They will offer any advice specific to you and your needs.

Some types of buy to let mortgages are not regulated by the FCA. Think carefully before securing other debts against your home. As a mortgage is secured against your home, it may be repossessed if you do not keep up with repayments on your mortgage. Equity released from your home will also be secured against it.

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