Back in 2017, the UK Government outlined plans to work with lenders to develop mortgage products that were more “green”, as part of its Clean Growth Strategy. The aim was to use these so-called 'green mortgages' to encourage people to make their homes more energy efficient. As banks would be willing to offer things like lower interest rates to the owners of energy-efficient homes.
At the time though, more research was required to determine whether these mortgage products would actually have a lower lending risk, as the government's strategy asserted. Now, Nationwide Building Society has recently created a fund of £1bn, in order to help borrowers get mortgages for more energy-efficient homes.
The fund is focused on offering preferential mortgage rates to borrowers who decide to purchase properties that are new-build and that have an A-rated Energy Performance Certificate (EPC). Plus, for those homeowners who decide to make their homes more energy efficient, the bank will offer loans with a 1% interest rate, up to £25k.
The bank is also encouraging other mortgage lenders to start offering borrowers ‘green mortgages.’ With the aim of encouraging more people to start making efforts to transform their homes, creating more environmentally friendly properties.
Promoting these ‘green mortgages’ will mean borrowers will be less likely to default on their payments, at least according to the government's reasoning. Homes that are more efficient with their use of energy will naturally generate lower bills, meaning homeowners will likely have more in terms of disposable income. Despite the reasoning though, there’s still a lack of hard evidence to draw these conclusions from.
Nationwide has also called for the government to review and reform council tax in the UK. As this will be another potential incentive for homeowners to reduce the carbon emissions of their homes.
If you’re a homeowner looking to cut down on bills in your current property, a remortgage can be a very effective way to free up cash. Or if you’re searching for that perfect mortgage deal for a new home, our expert mortgage brokers help. We’ll find you the deal that’s right for you, by comparing hundreds of mortgage deals across the market.
Get in touch with us today on 0345 305 2540, or info@taylormade-finance.co.uk
