When it comes to buying a property, it is likely that many of us are less influenced by how energy efficient a home is and more about how it looks and its potential. However, the need for homes to be energy efficient is more prevalent than ever before with residential properties accounting for about 15% of the UK’s climate emissions, according to the Office of National Statistics (ONS).
Currently, there is a big task at hand to reduce the UK’s carbon emissions with a government-set target of net-zero carbon emissions by 2050. To help support this the government, as part of its Clean Growth Strategy, set an aspiration to upgrade as many homes as possible to Energy Performance Certificate (EPC) Band C by 2035
with fuel poor homes reaching this standard by 2030.
But how can an energy-efficient home influence what mortgage deal is available to you?
What is a ‘Green’ mortgage?
While green mortgages have been around for a few years they have only recently started to gain traction amongst mortgage lenders with more deals coming to market than before.
Currently, there’s no clear definition of what a green mortgage deal looks like so it’s important to understand the different types of deals lenders have available under the green mortgages umbrella.
Typically, green mortgages offer cheaper rates when you buy a property that conforms to a specific energy standard. While each lender will have a criteria specific to them, a green mortgage is often available on a property with an EPC (Energy Performance Certificate) rating of A or B.
Alternatively, some lenders will offer a ‘cashback’ incentive on mortgages if you buy a property that qualifies as a green home.
For those re-mortgaging, there are also a few lenders that offer mortgages that are focused on improving the energy efficiency of existing homes.
About EPCs and PEAs
As mentioned before most lenders will determine what homes qualify for their green mortgage products by what their EPC rating is, or for new-build properties what their PEA (Predicted Energy Assessment) is.
All homes for sales have to have an EPC inspection which measures the property’s energy efficiency on a scale of A to G; A being the most efficient, G being the least efficient. For new-build properties, they will be provided with a Predicted Energy Assessment (PEA) before they’re completed.
Things that are taken into consideration are whether the property has loft insulation, are the windows single, double or triple glazed, as well as how efficient the boiler is.
How can I improve my EPC?
If you’re looking to improve your home’s energy efficiency, then it’s worth reviewing your EPC certificate. Each EPC gives several recommendations, where required, to improve your property’s energy performance including the installation costs as well as what yearly savings could be made.
Energy-performance improvements recommended on EPCs include:
• insulating your loft and cavity walls
• draught-proofing windows and doors
• upgrading your boiler
• installing double glazing
• using alternative sources of energy, such as solar power