If your home has an A or B EPC rating, you could qualify for a green mortgage. These deals can come with rate discounts, cashback incentives and the potential for lower energy bills. In this article, we'll cover how green mortgages work, their pros and cons, and whether they're right for you.
“Green mortgages are a great example of lenders rewarding people for making sustainable choices. The rate discount is usually small, so I’d never suggest choosing a deal based on the green label alone. But if your home already has an A or B EPC rating, it’s well worth a look. Add cashback and lower energy bills, and the savings can soon stack up.
The best way to know is to compare the market, with green and standard deals side by side. That’s where a mortgage adviser can really help, because we can run the numbers for you and show you what works best for your budget.”
Karina Gerdes
Group Head of Sustainability
What is a green mortgage?
A green mortgage rewards you for owning an energy efficient home.
Some lenders offer a lower rate, some offer cashback, and some do a bit of both. That means more money in your pocket, plus lower energy bills too.
The good news is you won’t need your home to be covered in solar panels or triple glazing to qualify for a green mortgage.
Green mortgages explained
Lenders want to encourage people to buy or improve energy efficient homes. So if your property has an A or B Energy Performance Certificate (EPC) rating, you may qualify for a green mortgage. These deals are available across the UK market, from high street lenders to specialist providers.
You might hear green mortgages called:
Energy efficient mortgages
Eco mortgages
What is an Energy Performance Certificate (EPC)?
An Energy Performance Certificate (EPC) shows how energy efficient your home is. It scores your home from A to G:
A is the most energy efficient
C is generally seen as a good rating
D to G means there’s more room to improve
Your EPC also comes with a rough idea of your running costs and tips on how to make your home more energy efficient.
You’ll need an EPC when you buy, sell or rent a home and it lasts for 10 years.
You can look up any current (or old) EPC for a home in England, Wales or Northern Ireland on the government's EPC Register. In Scotland, use the Scottish EPC Register.
Which EPC ratings qualify
The EPC rating you need for a green mortgage is usually A or B. Some lenders do accept EPC C too though, especially for remortgages or further advances, so it’s always worth talking to a mortgage adviser to see if your home qualifies.
New builds often qualify automatically for green mortgages because they’re built to modern efficiency standards. Every lender sets its own rules, so check the small print.
How do green mortgages work?
Green mortgages work in a few different ways depending on whether you’re buying, remortgaging or improving your home.
Green mortgages for buying a home
If you’re buying a property with a high EPC rating, you may be offered a green mortgage rate that’s slightly lower than a standard deal. It’s usually a small discount, but every bit helps when you’re budgeting for moving costs and monthly payments.
Green remortgages
If your current home already has an A or B EPC rating, you may be able to switch to a green mortgage when your deal runs out. This can be a simple way to save money without changing anything about your home.
Green further advances for energy efficient improvements
Some lenders offer green further advances. A further advance is a loan you can add to your existing mortgage. When you’re using a further advance to pay for green home improvements like insulation, solar panels or a heat pump, then these can come with lower rates than standard home improvement loans.
Cashback and rate discounts
Green mortgages often include:
Lower interest rates (usually small, less than 1%)
Cashback when you complete (a one-off payment)
Cashback for making improvements
The incentives vary, so comparing the market matters. A mortgage adviser can help you work it all out.
What are the benefits of green mortgages?
Potentially higher property value
Stronger EPC ratings can mean your home will be worth more. This means:
A higher purchase price when you come to sell
A lower loan-to-value (LTV) next time you remortgage = a lower interest rate
More equity in your home to back future borrowing.
Potentially lower interest rates
Some lenders knock a little off their rate for energy efficient homes. Even a small drop can add up over a few years.
Use our Mortgage Repayment Calculator to find out how much your mortgage payments are likely to be based on interest rates and terms.
Lower energy bills
This one’s a big win. An efficient home keeps the heat in and wastes less energy to warm your home. That means smaller bills every month, whatever your mortgage deal. Lower mortgage payments + lower energy bills = more spare cash for you.
Reducing your carbon footprint
Using less energy means producing less carbon. If you’re working towards a greener lifestyle, a green mortgage supports that goal. Think of it as doing your bit for the UK’s wider net zero ambitions.
Cashback incentives
Some green mortgages come with cashback. Green mortgage cashback can be a handy boost after moving or remortgaging. You could put it towards furniture, a new boiler or even a few extra insulation upgrades.
Are there any downsides to green mortgages?
Green mortgages can be a great fit, but they’re not right for everyone. Here are a few things to keep in mind.
Green rates aren’t always the cheapest deal
A green mortgage rate might offer a discount, but it isn’t guaranteed to be the cheapest product on the market. Sometimes a standard mortgage beats it on rate or fees. Don’t automatically take a green mortgage without checking deals on the wider market.
Limited product choice
There are fewer green mortgages than standard ones. You may have a few lenders to choose from rather than dozens. This can limit your choice of fixed rate periods or loan sizes. That’s why it helps to have a mortgage adviser searching for you.
Why comparing the market matters
The best deal for you might be green, or it might not. Looking at the market means you see both. A mortgage adviser can compare green and standard deals side by side. That way you pick on the numbers, not just the label.
EPC requirements and costs of improvements
If your home doesn’t already have a high EPC rating, you may need to invest in improvements. Insulation, double-glazing or heating upgrades can be expensive, even with government support.
How to improve your home’s EPC rating
Want to boost your EPC rating? A few well-chosen upgrades can make a real difference. Start with the simple wins, then look at bigger projects. For more ideas, visit our Green Hub.Insulation, windows and doors
Insulation is often the best place to start. Loft and wall insulation stops heat escaping. Double or triple glazing and draught-proofed doors help too. These are often the most cost-effective ways to improve your EPC rating.
Heat pumps and the Boiler Upgrade Scheme
A heat pump is a more efficient way to heat your home. The government’s Boiler Upgrade Scheme gives eligible homeowners in England and Wales a grant towards installing one. It’s up to £7,500, and some off-gas-grid homes can get more. Your installer usually applies for you, so check you’re eligible before you book.
Solar panels
Solar panels can improve your EPC rating and reduce your electricity bills. Some lenders offer green further advances specifically for solar installations. Plus, if you add a battery to your solar setup, you can store any extra energy and potentially sell it back to the grid for a profit.
Getting a new EPC after improvements
Once you’ve made improvements, you’ll need a new EPC to show your updated rating. This is essential if you want to qualify for a green mortgage.
Only an accredited assessor can give you a new EPC. It usually costs about £60 to £120, depending on the size and location of your property. The new certificate shows your improved rating, and you can share it with your lender to show you’ve hit their green mortgage rules.
Speak to a mortgage adviser to see if a green mortgage is right for you
Green mortgages can be a helpful way to save money, lower your bills and support future improvements. But they’re not always the cheapest option, and the right deal depends on your home, your EPC rating and your plans.
Speaking to a mortgage adviser is the easiest way to work out whether a green mortgage suits you. They can compare the market, explain the options and help you choose a deal that fits your budget and your home.
Ready to chat? Our advisers are ready to call you back today. The first chat costs nothing and is totally free of obligation.
Something to bear in mind...
Frequently asked questions
Not always, but they can be. Some lenders offer lower rates or cashback on green deals. Others have standard deals that work out cheaper overall. Compare the total cost, including fees, before you choose.
Yes, if it meets the lender’s EPC rule. Older homes often have lower ratings, but upgrades can help. Insulation and a better heating system can make a big difference. A green further advance could help you pay for them.
Often, yes. New builds tend to have high EPC ratings, so many meet the lender’s rule. Your mortgage adviser can check which lenders will accept yours.
Yes. If your home has the right EPC rating, you could switch. Your lender will check your EPC as part of the process. Even if your rating is too low today, improvements could get you there.
Most lenders want an A or B. A few accept a C. It varies, so it’s worth asking before you apply.