Green Mortgage Deals Explained
If you’re planning to buy a home or remortgage, you might be surprised to learn that your property’s energy efficiency could impact the type of mortgage you get.
Green mortgages are a growing trend in the lending world, offering incentives such as lower rates or cashback when you choose or improve an energy-efficient home.
These mortgage products aren’t just about saving money, they also encourage more sustainable home ownership.
At Kerr & Watson, we specialise in helping you explore your mortgage and protection options with expert guidance.
We take the time to understand your personal circumstances and walk you through your choices, including the growing range of green mortgages available.
What is a Green Mortgage?
A green mortgage rewards you for choosing a more energy-efficient home. Typically, you’ll need to be purchasing or remortgaging a property with an Energy Performance Certificate (EPC) rating of A or B. Some lenders may also consider C-rated properties or offer incentives if you make energy-efficiency improvements.
Depending on the lender, green mortgage benefits might include:
- Lower interest rates
- Cashback when buying or improving an energy-efficient home
- Better borrowing capacity
- Exclusive products or discounts for specific improvements
The rise of green mortgages is part of a broader push to meet environmental targets and reduce carbon emissions from homes.
Why Energy Efficiency Matters to Lenders
Lenders are increasingly focused on the energy performance of homes, and not just because it’s good for the environment.
A more energy-efficient home generally means lower running costs, which improves your affordability profile. This means you could potentially borrow more or access better rates. see our residential affordability calculator for an indicative idea of affordability.
From a risk perspective, these homes may be easier to sell in future, as energy-efficient properties are expected to remain in higher demand. Some lenders also have internal sustainability targets to meet, and green mortgages help them work towards those.
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What Are the Benefits of a Green Mortgage?
A green mortgage can be beneficial in more ways than one. Here’s what you might gain:
Lower rates Many green mortgage products offer a reduced interest rate, which means lower monthly repayments and long-term savings.
Cashback Some lenders reward you with cashback for purchasing an energy-efficient home or for committing to make green improvements.
Improved borrowing potential Because energy-efficient homes usually have lower utility bills, some lenders may stretch your borrowing capacity.
Better property value Investing in green upgrades can also boost your property’s value. Properties moving from a D to a C rating can increase in value by up to 4%, while moving from an F to a C has shown average value gains of 16%.
Eco-conscious living Green mortgages help support the wider goal of sustainability. Choosing a home with lower emissions contributes to a healthier planet.
Who Offers Green Mortgages?
Several lenders now offer Green Mortgage Deals for EPC A–C Homes. While offers vary, at the time of writing (July 2025) some of the main players include:
- Barclays: Lower rates on new-build properties with EPC A or B
- NatWest: Discounted fixed-rate mortgages and cashback on qualifying homes
- Nationwide: Cashback depending on EPC rating
- Halifax and Santander: Cashback or additional borrowing for eco-friendly improvements
These products are often updated, so it’s worth having a mortgage adviser who can monitor the market and find the most suitable option for your circumstances.
What Types of Homes Qualify?
New-build homes are usually built to higher energy standards, making them more likely to qualify for green mortgages. However, older homes can still be eligible, especially if they’ve been upgraded with:
- Loft or wall insulation
- Solar panels
- Double or triple glazing
- Energy-efficient heating systems such as heat pumps
- Smart meters and thermostats
If your home doesn’t yet meet the criteria, you may still qualify for a green mortgage that includes additional borrowing to fund improvements.
What About the Costs?
It can be costly to bring an older home up to green standards. The cost of improving from a D to a C rating can range from around £3,500 for a small flat to over £12,000 for a large detached home. However, there are potential savings to be made in return. Energy-efficient homes cost less to run and could attract higher valuations. Some homeowners recoup part of the investment through increased property value or energy bill savings.
Incentives such as cashback and lower borrowing rates can also help offset the costs. And depending on your circumstances, you might qualify for a government grant to cover some improvement costs.
Can You Get a Green Mortgage with Bad Credit?
While it can be more challenging, with some lenders, it is not impossible. Some lenders will consider applicants with poor credit, especially if affordability and the property meet the necessary criteria. Working with a knowledgeable adviser can help you find lenders who are open to your situation.
Why Speak to Kerr & Watson?
At Kerr & Watson, we provide tailored advice to help you make informed decisions about your mortgage.
Whether you’re buying an eco-friendly new build, planning improvements, or just want to know if a green mortgage is right for you, we’re here to guide you.
We take a personal approach, explaining your options clearly and helping you navigate the application process from start to finish. Our goal is to make your mortgage journey smoother, greener, and financially rewarding.
Conclusion
Green mortgages can offer a smart way to save money and reduce your carbon footprint. Whether you already own an energy-efficient property or are planning upgrades, these mortgages provide a financial incentive for going green.
By choosing a green mortgage, you’re investing in a more sustainable future while potentially securing a better deal for yourself. But with so many lenders and offers to choose from, it pays to have expert advice on your side.
Contact Kerr & Watson today to see how we can help you take advantage of green mortgage options or any other suitable solutions.
