Green mortgages – sometimes also called eco mortgages – are mortgage loans specifically designed for financing an energy-efficient property, or to use to pay for energy-efficient upgrades to a home. In principle, they’re designed to offer more attractive terms than conventional repayment mortgages, via things like lower rates, or cashback incentives.
With the UK working towards net zero emissions, sustainable homes are more important than ever – and more lenders are stepping up to support this shift. According to data from Podium Solutions, the number of green mortgage products available has more than quadrupled since 2022, and is continuing to grow.
So, if you’re wondering how green mortgages work, or if a green mortgage could be a good fit for you, take a look at some of the most frequently asked questions about green mortgages.
What is a green mortgage?
While there’s no solid industry definition of what constitutes a ‘green mortgage’, this type of eco finance does come in a couple of different forms. Broadly, there are two categories of green mortgage available to borrowers:
1. EPC mortgages
These are available for energy efficient properties that hold a high EPC rating. Typically, properties will need to be EPC rated A or B, with those in lower bands not usually eligible.
2. Green home improvement loans
Unlike EPC mortgages, green loans provide homeowners with the finance to make energy efficient upgrades to properties. Here, funds might be used to upgrade insulation, or replace old single-glazed windows with double glazing.
Ultimately, the goal of this form of green lending is to incentivise going greener at home. Whether that be through offering favourable rates towards financing green improvements, or offering homeowners perks on account of their home’s high EPC rating.
Generally, ‘green homes’ are considered to be lower risk to a lender. With lower power and heating costs, household expenses are generally lower. This reduces the financial pressures on borrowers, and in turn makes them more likely to meet their mortgage payments – all of which will be taken into account during the lender’s affordability assessment. Additionally, energy-efficient homes may command higher resale values.
Who can get a green mortgage?
Right now, to qualify for a green mortgage on the grounds that your home (or the home you’ll be purchasing) is already ‘green’, the property will need to have an EPC rating of either A or B. But homes with these ratings are in the minority, with fewer than 15% of homes for sale on Rightmove (April 2025) meeting these ratings. And the number of properties meeting the top-tier A rating is less than 1% overall.
Alternatively, you can borrow money – often at a lower interest rate – and use it towards making green upgrades in a property you already live in.
What are the benefits of a green mortgage?
Often, you’ll find they have better terms, or cheaper rates
Green lenders often include several financial incentives within their products. These can include discounted interest rates with lower monthly payments compared to conventional repayment mortgages; savings or reductions on application and/or arrangement fees; and cashback lump sums for customers who complete on a qualifying mortgage.
You may find that a lender is also able to lend more to you if you have a home that meets a set energy efficiency standard. This works off the assumption that because your energy bills are likely to be lower, you’ll be able to put more of your monthly income towards a mortgage.
They can be used to fund upgrades that result in lower energy bills, and a reduced carbon footprint
Green mortgages can also be used to make energy-efficiency improvements to your current home. These can include insulation upgrades and installing efficient heating systems such as heat pumps. Such investments can lead to reduced energy consumption, which in turn means lower bills, and a lower carbon footprint.
Can I speak to a mortgage broker about green mortgages?
Of course. Mortgage brokers can help you understand more about mortgages in general, including green mortgages, and can also know which type of mortgage might be the most suitable fit for your circumstances. They can also help explain whether a green mortgage could be a good fit for you. You can speak to a broker to learn more about whether you’re eligible, as well as any other guidance you might need.
Mortgage brokers are knowledgeable about a wide range of potential options. They can help you to compare both the green and conventional mortgage offerings from a variety of lenders, while taking into account your financial circumstances and property.
Do all lenders offer green mortgages?
Not all mortgage lenders provide green mortgages. However, the number that do has grown steadily in recent years.
Green mortgage products are fairly new, having only been launched as recently as 2019. It’s likely that more lenders will offer green products in the coming years, as the energy efficiency of properties becomes a greater focus for households.
Do you need an up-to-date EPC to get a green mortgage?
Having an up-to-date EPC will either be mandatory or extremely helpful. As ultimately, the lender will use your EPC to help them work out whether you meet the criteria for a green mortgage.
In the case of EPC mortgages, you will need to prove that your property is eligible with an EPC rating of A or B. Lenders will require this proof to determine that your property qualifies, so you will need an up-to-date EPC certificate.
It’s worth noting that if you’ve made energy efficient upgrades since your most recent EPC was ordered, the new upgrades won’t be reflected in your EPC rating until you order a new certificate. Which will involve having an assessor visit your home, and a new up-to-date certificate issued.
For green home improvement loans that are designed to help homeowners finance eco-friendly upgrades, your lender may also ask for an up-to-date EPC. However, even if they don’t, it can be a useful thing to have. You may need to show that the planned improvements will increase the property’s energy efficiency, and a recent EPC will help to demonstrate this.
What is the application process for a green mortgage?
There aren’t too many differences in the application process for a green mortgage and a conventional mortgage. You’ll still be expected to verify your income with the lender, as well as going through their affordability assessment. You can read more about the process in our guide to mortgage affordability.
However, there are a few key differences to note with green mortgage applications:
Eligibility criteria for EPC mortgages
For EPC mortgages, green lenders will want to check that your property qualifies for their specific product. This will involve them checking that your property has the necessary EPC rating (usually A or B). For green improvement loans, they will also want to understand how you plan to use the funds for energy efficiency improvements.
Timeframes for green home improvement loans
For green improvement loans, lenders may also give you a set timeframe to make your energy efficiency improvements within.
Do green mortgages have lower interest rates?
Green mortgages may provide homeowners with lower interest rates compared to conventional mortgages, but this isn’t guaranteed. In fact, some non-green mortgages may actually provide lower interest rates and/or more attractive or suitable terms overall. Speaking to a mortgage broker about your options could be a good place to start.
To summarise
- There are two categories of green mortgage available to borrowers:
EPC mortgages: available for energy efficient properties that hold a high EPC rating.
Green home improvement loans: provide homeowners with the finance to make energy efficient upgrades. - To qualify for a green mortgage on the grounds that your home (or the home you’ll be purchasing) is already ‘green’, the property will need to have an EPC rating of either A or B.
- Benefits of a green mortgage can include better terms, or cheaper rates and can be used to fund upgrades that result in lower energy bills, and a reduced carbon footprint
- Mortgage brokers can help you understand more about mortgages in general
Please note: Rightmove is not authorised to give financial advice; the information and opinions provided in these articles are not intended to be financial advice and should not be relied upon when making financial decisions. Please seek advice from a regulated mortgage adviser.