The mortgage market can be a confusing place. Fixed rate, variable, offset, interest-only and green mortgage are just a few of the mortgage types you can find yourself applying for. Knowing the difference, though, and understanding what type gives you the most benefit can be difficult.
In this edition of our blog, we take a look at the green mortgage and see why it could be the best option for your next move on the property ladder.
Put simply, a green mortgage is a form of loan where borrowers are given favourable terms on their mortgage, or cashback for buying a home that demonstrates specific environmental benefits. This could be through the use of solar panels, hydro energy or a more environmentally friendly construction.
A green mortgage can be applied to a home that exhibits these green credentials or to a home where the borrower commits to making specific green improvements.
Green mortgage eligibility
To get a green mortgage, you’ll have to prove one of two things when buying a house or remortgaging your current one.
Live in or buy an energy-efficient home
If the home you plan to buy, or the one you already live in, has an EPC rating of A or B, you could get rewarded by your lender with a better mortgage rate or some cashback. Not all lenders offer this incentive, so it is worth checking before committing to anything.
Making upgrades to make the home more energy efficient
If you commit to making upgrades to your home that enhance its EPC rating, you could be rewarded with a better deal when you remortgage. In some cases, much like with those buying a home, the lender may reward you with cashback rather than a lower interest rate.
Why do lenders offer green mortgages?
A lender sees a green mortgage as not only an incentive to lure in new customers but also as a way to protect the money they are lending. With such a focus on climate change these days, people are becoming more aware of their environmental responsibilities. As a result, lenders see properties like this as more likely to hold their value and therefore less risky to lend against.
Not only will the environmental benefits of the home be useful to the current owners, but when it comes to selling the property, it’s likely to be less difficult. This gives the lender further faith in lending as it will be easier to recoup their money.
Who are the green mortgage providers?
Not all lenders currently offer green mortgages, but many of the main ones do. You can currently find an assortment of green mortgages offered by:
- Halifax
- NatWest
- Barclays
- Santander
- HSBC
And many others.
What they offer in terms of cashback or better rates will vary, but a quick browse indicates cashback ranges from around £250-£2,000. Most of the lenders also have caveats over the LTV (loan-to-value) percentage, with the maximum often capped around 80-85%.
Green mortgage deals are also available with some of the smaller, independent lenders too, so don’t just limit yourself to the established names, especially if a better deal is out there waiting to be found.
Are green home mortgage rates better?
They can be, but more often than not, there is not much difference between green mortgages and regular mortgages when you cast your eyes across the entire mortgage market.
Where some of the bigger lenders may offer reduced rates for green mortgages compared to their other mortgage products, when these are put up against the wider market, there isn’t always a lot of difference. Sometimes, it even works out that green deals are actually more expensive.
For example, a 2-year fixed green mortgage with NatWest is currently priced as follows:
- Product fee £995
- Initial rate 3.88%
- Rate after initial period ends 7.88%
- Min deposit 40%
- Max LTV 60%
Compare this to a standard 2-year regular fixed mortgage from First Direct and you see:
- Product fee: £490
- Initial rate: 4.19%
- Rate after initial period ends: 6.74%
- Min deposit 25%
- Max LTV 75%
As you can see, savings can be made if you look for them. However, these figures were correct as of May 1st, 2025, and are subject to change. By the time you read this, the green deal may be offered at better rates than the deal being offered by First Direct.
How do you apply for a green mortgage?
You apply for a green mortgage just like you would apply for any other mortgage. The only difference is that you need to find a property that demonstrates its green credentials.
Follow the steps below and finding a green mortgage and then being approved shouldn’t be hard.
Research lenders offering green mortgages
Look at the deals being offered by lenders and see which one offers you the best rates or cashback deals. Remember, at this stage, it is just research. Do not apply for a mortgage yet as you haven’t even found a property! Just give yourself an idea of what the green mortgage products are like.
Get an agreement in principle
Getting an agreement in principle helps reinforce your credibility as a buyer. It demonstrates that you can afford a property and gives sellers the confidence that you are genuinely interested in purchasing their home.
Find a property that has an EPC of A or B
To be eligible for a green mortgage, the house you wish to buy needs to have an EPC rating of B or above. If you are remortgaging, your home can have a rating lower than this, but you’ll need to show what work you are doing to bring it up to an A or B rating.
Have your offer accepted
Make your offer on the property and have it accepted. Be prepared for negotiating, but don’t be too unrealistic. Offering way over the odds can backfire just as much as offering under the asking price!
Hunt out a green mortgage deal
With your list of lenders and potential mortgage deals, find the one that best suits the property you want to buy. You might find that some of the lenders you initially found no longer offer a suitable product or have changed their rates for the better. It can be wise at this stage to visit a mortgage broker. They can cut through all the complexities and condense the list of suitable lenders into something much more concise.
Apply for your green mortgage
Apply for your green mortgage, and if it is accepted, proceed with all the legal aspects of a house purchase that normally come with buying a house. You’ll then exchange contracts and are good to finalise the purchase!
If you are looking at houses to buy in Epsom with a green mortgage, speak to our team. In our position as an independent estate agent for Epsom and the surrounding areas, we are expertly placed to help people find their ideal home. Our team of skilled estate agents know the property market well, and with independent mortgage advice also available, finding a green mortgage can be made even easier.