Making green mortgages easy
Nicola Goldie, Virgin Money's Head of National Accounts, discusses how to help your client fund a sustainable new home.
There are already over 200 green mortgage deals, according to Moneyfacts and the sector is growing as lenders accelerate their plans to help reduce carbon emissions from the UK’s housing stock. But there’s no industry-wide definition of a green mortgage so each provider’s criteria and products will differ slightly.
As a rule of thumb a green mortgage is available to buyers purchasing a home with an A or B energy rating. Some lenders also offer capital raising products to borrowers making energy-efficient home improvements to their existing home. The benefits to the client include a reduced rate or cashback
At Virgin Money we have a range of Greener Mortgages priced at a lower rate than the ‘non-green’ alternative which are available when buying a new build home that is A and B rated, either through an Energy Performance Certificate (EPC) or a Predicted Energy Assessment (PEA). Plus for every Greener Mortgage that completes we will make a one-off payment to Carbon Neutral Britain to help fund environmental projects, such as the development of wind, solar and hydro renewable energy. The funding will offset the equivalent of the average UK home’s carbon emissions for an entire year.
But we recognise this is a new market and some brokers may not be up to date yet with green mortgages, explains Virgin Money’s National Sales Manager, Richard Walker.
“We’ve noticed that in some cases the cheaper green option isn’t being selected, even when the client is eligible for it, so we want to help brokers understand how to access these deals and what they may need to do differently when advising a new build client.”
In fact, there are very few differences in the mortgage process when you advise your client to take a green mortgage.
On submission of the case lenders require the usual evidence – proof of ID, proof of income and completed application form. But most also need proof of the property’s energy-efficiency rating.
Some lenders are more prescriptive than others about which documents they accept. At Virgin Money we want to be as flexible as possible and will accept the EPC or PEA as evidence.
Walker says: “Getting the correct documentation shouldn’t be a barrier to choosing the green option, in fact, you shouldn’t encounter any holdups.
“We know timescales can sometimes be very tight on new build purchases, but the builder should have this paperwork ready at the outset.”
Adrian MacDiarmid, head of mortgage lender relations at Barratt Developments, agrees: “We’ve had a successful process in place for over three years to ensure the buyer or broker gets the relevant documents on demand to evidence a property’s energy efficiency.
“If the home is built and there’s already an EPC, they can have it. If it’s not built, we are able to provide a PEA or other similar evidence. I can see no reason where there should be any delay to the mortgage and homebuying process due to accessing evidence from the developer.”
He continued: “It’s in the homebuilder’s interest to support green mortgages. Brokers should never feel pressured to choosing a less attractive product because they think the green mortgage means extra hoops to jump through or a processing delay.”
For more information on Virgin Money’s Greener Mortgages, visit our website. If you’ve got any questions, you can get in touch with your Business Development Manager or dedicated Regional Service Team.
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