Green Mortgages
Lower rates for energy-efficient homes. Save money whilst saving the planet.
What are the benefits of a green mortgage?
Green mortgages offer 0.10-0.50% lower interest rates for energy-efficient properties with EPC ratings A-C, saving up to £25,000 over 25 years on a £300,000 mortgage. Additional benefits include cashback up to £2,000 for eco-improvements, lower energy bills (£800-£1,200 annual savings), and eligibility for government grants like the Boiler Upgrade Scheme.
What is a green mortgage?
A green mortgage offers better rates or cashback for energy-efficient properties with EPC ratings A-C. You could save 0.10-0.50% on interest plus benefit from lower energy bills. Your Home Finance helps you access green mortgage incentives and combine them with government grants.
Content reviewed: 13 January 2026
What Are Green Mortgages?
A green mortgage (also called an energy-efficient mortgage or eco-mortgage) is a specialist mortgage product designed to incentivise homeowners to buy or improve energy-efficient properties. These mortgages offer preferential interest rates, typically 0.10% to 0.50% lower than standard mortgages, or cashback incentives up to £2,000 for properties with high Energy Performance Certificate (EPC) ratings or for homeowners making qualifying eco-improvements.
Green mortgages in the UK work by rewarding properties rated A, B, or sometimes C on their EPC. The EPC rating system measures a property's energy efficiency and environmental impact, with A being the most efficient. Lenders recognise that energy-efficient homes have lower running costs, making them more affordable long-term, and they pass some of these savings to borrowers through better mortgage terms.
How Green Mortgages Save You Money
The financial benefits of green mortgages are substantial. On a typical £300,000 mortgage over 25 years, a rate reduction of just 0.25% saves approximately £10,000 in interest. When you combine this with:
- Cashback offers of £500-£2,000 for energy improvements
- Reduced energy bills (A-rated homes cost £800-£1,200 less per year to run than D-rated properties)
- Government grants like the Boiler Upgrade Scheme (£7,500 for heat pumps) and ECO4 funding
- Higher property values (energy-efficient homes sell for up to 10% more)
The total savings over your mortgage term can exceed £30,000-£50,000, making green mortgages one of the most financially attractive options for UK homebuyers.
Who Can Get a Green Mortgage?
Green mortgages are available for various scenarios:
- First-time buyers purchasing energy-efficient new builds or retrofitted properties
- Home movers buying properties with EPC ratings of A, B, or C
- Remortgage customers who want cashback to fund eco-improvements like solar panels, heat pumps, or insulation
- Self-build developers creating sustainable homes with renewable energy systems
- Buy-to-let landlords improving rental properties to meet minimum EPC standards (currently E, rising to C by 2025)
Whether you're buying a new build with an A rating, retrofitting an older property with solar panels and heat pumps, or simply remortgaging to access cashback for cavity wall insulation, there's likely a green mortgage product suited to your needs.
Green Mortgage Requirements in 2024
To qualify for a green mortgage, you typically need:
- EPC rating of A, B, or C (varies by lender—some only accept A/B)
- Valid EPC certificate less than 10 years old from an accredited assessor
- Proof of improvements if claiming cashback (invoices, MCS certificates for renewables, updated EPC)
- Completion timeline for improvements (usually 6-12 months from mortgage completion)
- Standard mortgage criteria (deposit, income, credit checks—same as conventional mortgages)
The good news is that deposit requirements are identical to standard mortgages—typically 5-10% for residential purchases and 25% for buy-to-let. The EPC rating doesn't change fundamental lending criteria; it simply unlocks better rates and cashback opportunities.
Key Benefits
Why choose a green mortgage for your energy-efficient home
Many lenders offer preferential rates for energy-efficient properties, potentially saving thousands over your mortgage term
Some lenders provide cashback of up to £2,000 for energy-efficient home improvements or high EPC-rated properties
Reduce your carbon footprint whilst saving on energy bills—a win for both the planet and your wallet
Energy-efficient homes have significantly lower utility bills, improving long-term affordability
Expert Tips & Insights
Everything you need to know about green mortgages and energy-efficient property finance
Frequently Asked Questions
Common questions about green mortgages and energy-efficient home finance
Most Popular Energy-Efficient Home Improvements for Green Mortgages
Solar Panel Systems (Solar PV)
Cost: £5,000-£10,000 (typical 4kW system) | EPC Impact: +1-2 bands | Payback: 8-12 years
Solar panels are the most popular green mortgage improvement. A typical installation generates 3,400-4,200 kWh annually, saving £600-£900 per year on electricity bills. Combined with the Smart Export Guarantee (SEG), you can earn £100-£200 annually by selling excess energy back to the grid. Modern panels last 25+ years with minimal maintenance. Most lenders require MCS (Microgeneration Certification Scheme) certification. Solar panels significantly boost EPC ratings and property values.
Air Source Heat Pumps (ASHP)
Cost: £7,000-£13,000 (after £7,500 government grant) | EPC Impact: +1-3 bands | Payback: 10-15 years
Heat pumps extract warmth from outside air to heat your home and water, using just 1 unit of electricity to generate 3-4 units of heat. The UK government's Boiler Upgrade Scheme provides £7,500 grants, dramatically reducing installation costs. ASHPs work best in well-insulated properties with underfloor heating or large radiators. Annual running costs are typically £800-£1,200 for a 3-bedroom home—comparable to gas boilers but with zero carbon emissions. Combine with solar panels for maximum savings.
Cavity Wall & Loft Insulation
Cost: £500-£2,500 | EPC Impact: +1-2 bands | Payback: 2-5 years
Insulation offers the best value per pound spent. Cavity wall insulation (£750-£1,500) reduces heat loss through walls by up to 35%, saving £150-£280 annually. Loft insulation (£300-£500 for 270mm depth) prevents 25% of heat loss through the roof, saving £120-£240 per year. Both qualify for ECO4 grants if you receive certain benefits or have a low income. Insulation improvements can transform a property from D/E rating to C/B, making previously ineligible properties qualify for green mortgages. Professional installation takes just 1-2 days.
Double & Triple Glazing
Cost: £4,000-£12,000 (whole house) | EPC Impact: +0.5-1 band | Payback: 15-25 years
Modern A-rated double glazing reduces heat loss through windows by 50% compared to single glazing, saving £80-£150 annually on a typical home. Triple glazing offers marginal improvements over double glazing in the UK climate but may be required for Passivhaus standards. Windows account for 10-20% of heat loss, making glazing upgrades essential for older properties. Combined with other measures, new windows can push EPC ratings from E to C. Finance options spread costs over 5-10 years.
Smart Heating Controls & Battery Storage
Cost: £200-£6,000 | EPC Impact: +0-1 band | Payback: Varies
Smart thermostats (£200-£400) like Nest, Hive, or Tado learn your habits and optimise heating schedules, saving 10-15% on bills (£80-£150 annually). Battery storage systems (£4,000-£6,000) store excess solar energy for evening use, doubling solar panel savings. Combined systems qualify for green mortgage cashback. Smart controls are particularly effective when paired with heat pumps or underfloor heating. Installation is straightforward, often DIY-friendly for basic thermostats.
Choosing the Right Improvements for Your Property
For maximum EPC improvement: Start with insulation (loft, cavity walls, solid walls), then upgrade heating systems (heat pump or efficient boiler), then add renewables (solar panels). This order maximises impact per pound spent.
For fastest payback: Prioritise insulation and smart controls (2-5 year payback), then solar panels (8-12 years), then heat pumps (10-15 years with grant).
For maximum property value: Solar panels and heat pumps add most to resale value, followed by external wall insulation and new windows.
Combining improvements: The sweet spot is often insulation + solar panels + smart controls (total £8,000-£15,000), which can take a D-rated property to A/B rating whilst qualifying for £1,500-£2,000 green mortgage cashback and government grants.