Buildings being increasingly energy-efficient is a trend that doesn’t seem to be slowing down any time soon. From new builds constructed with more sustainable materials to homes being fitted with more environmentally friendly appliances, it’s evident that the new generation of homeowners will benefit from owning a property that has a greener impact on the planet. With the long-term well-being of the planet a priority held by most, the notion of green mortgages was introduced not too long ago. The idea behind this unique type of mortgage is to encourage aspiring homeowners to invest in both their future and their environment in a sort of mutually beneficial arrangement.
As part of our ‘back-to-basics’ campaign, we are looking to support newly qualified advisers or those thinking of becoming an adviser in expanding their knowledge of the industry. In this article, we will explain exactly how this arrangement works, as well as discuss how offering green mortgages can go a long way in showing your customers that you are a mortgage broker who cares about a lot more than fees and case completions.
What is a Green Mortgage?
So what exactly is a green mortgage? Green mortgages are a type of mortgage incentive which involves a given lender, subject to their existing eligibility criteria, offering borrowers preferential terms if they were to request a mortgage on a ‘green property’. A green property, also referred to as a green home or a green building, is a property which has been built or renovated to be more environmentally sustainable. This can include the property featuring construction from locally sourced or recycled materials, the property coming outfitted with energy-saving appliances and much more. A property which qualifies as a green home will then be assigned an Energy Performance Certificate (EPC) rating of either A or B, which guarantees that the building ranks highly in terms of energy efficiency and low in terms of environmental impact. If a customer requests a mortgage on an A or B EPC-rated property, then there is a chance that they could qualify for a green mortgage.
What are the requirements of a Green Mortgage?
Like with any mortgage, the terms of a customer’s application will vary greatly depending on a given lender’s eligibility criteria. In regard to specific requirements needed for a green mortgage to be progressed, there really isn’t much difference between it and what is needed for a standard mortgage application. The main caveat as stated previously is that the property your customer is looking to purchase must have an EPC rating of either A or B. In some cases, a lender may offer a green mortgage when your customer is remortgaging their home, in the event that their home is a newly qualified green property after they have made modifications or renovations contributing to the property’s energy efficiency.
What are the benefits of a Green Mortgage?
Depending on which lender you work with, there a number of benefits to customers a green mortgage offers, in addition to the numerous advantages which come with living in and maintaining an eco-friendlier property. Just by living in a green home, your customers will enjoy lower monthly energy bills which typically represent one of the most significant hidden costs of buying a home, in addition to knowing that the day-to-day running of their household will produce a lower carbon footprint which is a reward in itself. The actual benefits included when arranging a green mortgage for your customers include:
- Improved interest rates – Some lenders will allow you to arrange a mortgage for a customer at lower interest rates, which of course translates to more affordable monthly mortgage repayments. This fact coupled with the cheaper energy bills afforded by running a green home makes this way of living an attractive, budget-friendly proposition.
- Cashback – Again, depending on which lender you work with, your customer may be offered some sort of cashback incentive for either purchasing a green property or carrying out renovations to improve the energy efficiency of the property they own.
- Higher property value – Research has shown that prospective buyers are willing to pay up to a 20% premium on a green property* due to their lower carbon footprint and more cost-effective monthly energy requirements.
Which lenders offer Green Mortgages?
The drive to reduce our carbon footprint and make the planet a more hospitable place for years to come is one that is shared by many. For evidence, look no further than the incredibly diverse panel of lenders who are willing to offer your customers green mortgages on their new homes. By working with PRIMIS Mortgage Network, you will have full usability of our own panel of lenders who feature this sort of mortgage product as part of their services, with the full list available for your viewing right below. It is of course worth noting that each provider will vary in their offering, with eligibility and lending criteria unique to them which could have a major influence on your customer’s mortgage structure.
- Bank of Ireland
- Chorley BS
- The Co-op Bank
- Dudley Building Society
- Kensington Mortgages
PRIMIS’ ESG Strategy
Here at PRIMIS Mortgage Network, as part of the LSL Group, we have committed to embedding and realising a long-term dedication in working and living responsibly. As part of this we have established our list of Living Responsibly Priorities which includes concerns such as minimising our environmental footprint and ensuring excellent governance, just to name a few. Our passion for fostering this culture of sustainability goes beyond just what is in our proposition, and has instead been embedded into out culture and values.
Vikki Jefferies, Proposition Director at PRIMIS, commented: “We are committed to the environment and making positive change together. This group encompasses what we are striving to achieve: to minimise our environmental footprint by limiting our impact on climate change and reducing our consumption of resources”
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