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Green Mortgages Explained

8th Apr 2024

Green Mortgages are a type of mortgages designed to incentivise environmentally friendly practices and sustainable living. Here’s an explanation of how they work:

  • Financial Incentives: Green mortgages typically offer financial incentives to homeowners who make environmentally sustainable improvements to their properties. These incentives can come in the form of lower interest rates, reduced fees, or cashback rewards.
  • Energy Efficiency Improvement: The most common use of green mortgages is to fund energy efficiency improvements in homes. These improvements might include installing solar panels, upgrading installation, replacing windows with energy-efficient models, or installing high-efficiency heating and cooling systems.
  • Environmental Benefits: By encouraging homeowners to make these upgrades, green mortgages help reduce energy consumption and greenhouse gas emissions, which can have positive environmental impacts. This aligns with broader efforts to combat climate change and promote sustainability.
  • Cost Savings: In addition to the environmental benefits, energy-efficient upgrades can also lead to cost savings for homeowners by reducing their energy bills. These savings can help offset the costs of the upgrades over time, making them more financially attractive.
  • Qualification Criteria: To qualify for a green mortgage, homeowners typically need to demonstrate their plans for making energy-efficient improvements and may need to meet certain criteria set by the lender. This could include obtaining energy efficiency certifications or assessments for their homes.
  • Market Growth: As awareness of environmental issues grows and demand for sustainable housing increases, the market for green mortgages is also expanding. Although still a small pool of lenders compared to the whole market, the government may look to introduce incentives or policies to further encourage adoption. To read more about which lenders offer green mortgages and comparisons between green and non-green mortgages, click here.

Overall, green mortgages provide a way for homeowners to finance environmentally sustainable improvements to their properties while also enjoying financial benefits contributing to efforts to address climate change.


Energy Performance Certificates

An Energy Performance Certificate (EPC) is a document that provides information about the energy efficiency of a property. Since 2008, it’s been the law in England, Wales, and Northern Ireland, with Scotland joining in 2009.

  • Purpose: The primary purpose of an EPC is to provide potential buyers or tenants with information about the energy efficiency of a property. It helps them understand how much energy the property is likely to consume and the associated carbon dioxide (CO2) emissions.
  • Content: An EPC includes several key pieces of information:
    • A rating of the property’s energy efficiency, ranging from A (most efficient) to G (least efficient).
    • Recommendations for improving the property’s energy efficiency.
    • Estimated energy costs for heating, hot water, and lighting.
    • Details about the property’s construction and key features affecting energy efficiency.
  • Legal Requirement: There are certain EPC exemptions for business premises, as set out by the government.
  • Assessment Process: To obtain an EPC, a qualified energy assessor visits the property and collects data about its energy-related features, such as insulation, heating systems, and lighting. This information is then entered into software that calculates the property’s energy efficiency rating.
  • Validity: An EPC is valid for 10 years, after which it must be renewed if the property is being sold or rented out again.
  • Impact on Property Transactions: The energy efficiency rating provided by an EPC can influence property transactions. Properties with higher energy efficiency ratings may be more attractive to buyers or tenants, as they are likely to have lower energy bills and be more environmentally friendly.
  • Government Initiatives: The UK government has introduced various initiatives to promote energy efficiency, including minimum energy efficiency standards for rental properties and incentives for homeowners to improve their property’s energy efficiency.

Overall, an Energy Performance Certificate serves as a valuable tool for informing consumers about the energy efficiency of properties and encouraging measures to reduce energy consumption and carbon emissions.

Details of a property’s EPC rating are normally available online. Use the Gov.uk database if the property you’re researching is in England, Wales or Northern Ireland, and the Scottish Register for properties in Scotland.


At 3mc, we have a team of expert advisers who can discuss all your mortgage requirements. If you would like to discuss your options, give the 3mc team a call on 0161 962 7800.

All calls are recorded for training and monitoring purposes. 3mc for intermediaries only.

*Your home may be repossessed if you do not keep up repayments on your mortgage. 3mc (UK) Ltd is authorised and regulated by the Financial Conduct Authority and is entered on the Financial Services Register https://register.fca.org.uk/s/ under reference 302992. Please note: The FCA do not regulate Business Buy to Let Mortgages.