Green mortgages explained: cheaper rates for energy-efficient homes
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Quick answer: Green mortgages offer lower interest rates or cashback to buyers of energy-efficient homes — typically those with an EPC rating of A or B. Some lenders also offer retrofit mortgages to fund energy improvements.
Green mortgages are a growing segment of the UK mortgage market. Lenders offer preferential rates because energy-efficient homes have lower running costs, making borrowers less likely to default. They also align with government targets to improve the UK's housing stock energy performance.
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Read the full mortgages & first homes guide →Primary source: www.gov.uk/buying-a-home/preparing-to-buy
How green mortgages work
You apply for a mortgage product labelled 'green' by the lender. The lender checks the property's Energy Performance Certificate (EPC) — most require rating A or B, though some accept C for retrofit products.
If eligible, you receive a lower interest rate, cashback on completion, or access to additional borrowing for energy upgrades at preferential rates.
Retrofit and improvement mortgages
Some lenders offer 'green further advance' or retrofit mortgages that let you borrow extra to install insulation, heat pumps, solar panels, or double glazing.
The improvement must typically raise the EPC rating. Your lender may require a new EPC after the work is completed to confirm the upgrade.
Is a green mortgage worth it?
A 0.2 percentage point discount on a £200,000 mortgage saves roughly £20–£25 per month. Over a 25-year term, that adds up — but only if the green product's base rate is competitive against non-green alternatives.
Always compare the green product's overall cost against the lender's standard range and other market offers. The green label does not automatically mean cheapest.
Common questions
What EPC rating do I need for a green mortgage?
Most lenders require A or B. A small number accept C for properties where you commit to improvements. Check the specific lender's criteria.
Can I get a green mortgage on an older property?
Yes, if the property has been upgraded to A or B, or if you use a retrofit mortgage to fund improvements that raise the rating.
Do green mortgages cost more in fees?
Not usually. Arrangement fees and other costs are similar to standard products. The main benefit is the rate discount or cashback.