Nearly a fifth of the UK’s emissions come from buildings. As a nation, it’s a challenge we’re very aware of. In 2021, research found that 96% of UK homeowners worried about their home’s energy efficiency.
That’s already driven some big improvements:
- 84% of new builds are in the top energy efficiency bands A or B
- 46% of homes have an Energy Efficiency Rating of C or above, up from 13% in 2010.
Many lenders are now offering green mortgages. UK homeowners can use them to keep building on those positive trends. That’s because they help people make energy-saving home improvements.
In this article we’re going to explain how they work and show you the kind of improvements you can make. You’ll get to meet our customer Lillian, who’s built her own green home. And if you're over 50 we'll suggest a couple of other ways you can borrow to make them.
How does a green mortgage work?
So what is a green mortgage? At heart they’re pretty simple. They’re mortgages designed to help you either:
- buy a property with an energy rating of A or B
- fund green home improvements, like better insulation or a heating system upgrade
They’re based on the idea that lenders see energy-efficient properties as lower risk. That’s because they’re more likely to hold their value over the years. And your energy bills should be lower, so you’ll have more financial freedom and find it easier to meet your mortgage repayments.
But green mortgage products aren’t always the best choice.
You might still get a better rate with a standard mortgage. So it’s always worth shopping around to find the best deal for you.
And although green mortgages will help you live in a greener house, they don’t have to be ethical mortgages. For example, a lender offering them might be investing in non-green industries. If that’s a worry, then the Green Finance Institute and Bank.Green can help you find a greener lender.
How to make your home greener
There are many ways of making your home more energy efficient and cutting your carbon footprint.
To lose less heat from your house, cutting down the amount of energy you need to keep it warm, you can install:
- Double or triple glazing
- Flat roof, loft, floor or wall insulation
- External energy efficient doors
To start generating your own heat (and maybe energy too), think about:
- Solar or thermal heating systems
- Ground or air source heat pumps
- A wood-fuelled boiler
And to just be a bit more efficient around the home, try setting up:
- Smart heating controls
- Draught stripping
- LED light bulbs
This list is just a starting point. For more home energy-saving (and hopefully bill-shrinking) ideas, visit the Energy Saving Trust.
How a lifetime mortgage helped Lillian build her own sustainable home
Because she’s over 55, she could use one of our Lifetime Mortgages rather than a green mortgage. She could also have chosen a Retirement Interest Only (RIO) mortgage. They’re also for people aged 55+. Or our Payment Term Lifetime Mortgage, available for over 50s. We’ll tell you a bit more about them once you’ve met Lillian.
Are RIO or lifetime mortgages greener than other mortgages?
RIO or lifetime mortgages aren’t any more or less green than other types of mortgage. But you can use money from either one to make your home more energy efficient.
And we’ll help with that if you’re setting up or already have one of our Lifetime Mortgages. Our Energy Saver Cashback offer can give you:
- up to £1,000 cashback on your first mortgage advance
- up to £200 cashback across up to three drawdowns.
You can claim:
- £1,000 once, within 12 months of completing your mortgage
- £200 up to three times, within 12 months of each drawdown
If you’re thinking about taking out a lifetime mortgage, bear in mind that it’s a loan against your home. You won’t have to repay the loan until you die or move into long-term care, but there may be better ways to pay for your eco-friendly improvements. That’s why you can only take one out through a qualified financial adviser. They’ll make sure you understand how they work, and that it’s the right choice for you.
As energy prices rise, it could be worth looking at how you can make your home more energy efficient.
- For tips on saving energy in your home, check out the Energy Saving Trust’s website.
- Our Energy Saver Cashback offer can help cover the cost of any eco-friendly improvements, even if you’re a new Lifetime Mortgage customer.
- If you don’t have a later life mortgage and think one could help you make your home more sustainable:
- If you’re looking for a lender with the right green credentials, Green Finance Institute or Bank.Green can help you find one.
- You can only get a later life mortgage through a financial adviser – and it’s always worth getting good advice on them. If you don’t already have an adviser, find one at Unbiased.