Green Mortgages Explained: Are You Eligible?

Understanding Green Mortgages

Introduction

As sustainability becomes a key focus for homeowners and lenders alike, green mortgages are gaining popularity in the UK. These products may offer incentives—such as lower rates, cashback, or enhanced lending terms—for buying or owning energy-efficient homes.

⚠ Important: Your home may be repossessed if you do not keep up repayments on your mortgage.

In 2025, with the UK government continuing its drive towards net zero, understanding how green mortgage eligibility works is more important than ever. Whether you’re buying a new-build, renovating an older property, or remortgaging, knowing the criteria could help reduce borrowing costs while supporting energy efficiency.

This guide explains what green mortgages are, how they work, who might qualify, and examples of lenders currently active in the space.

What is a Green Mortgage?

A green mortgage is a home loan product that may offer preferential terms—such as lower interest rates, cashback incentives, or higher borrowing limits—when the property meets certain energy efficiency criteria. The aim is to encourage consumers to purchase or upgrade to more energy-efficient homes.

Eligibility is typically linked to the property’s Energy Performance Certificate (EPC) rating. Most lenders require a rating of A or B, though some may accept a C rating if you plan to make qualifying improvements.

Note: Green mortgages are based on energy efficiency assessments and do not represent formal environmental certification.

Why Are Lenders Offering Green Mortgages?

Green mortgages support the UK’s transition to net zero carbon emissions by 2050. Lenders may also view energy-efficient homes as potentially lower-risk assets due to reduced running costs for borrowers. In addition, government-backed schemes and increased demand for sustainable options are driving innovation in this market.

Who Can Apply?

Eligibility requirements vary by lender but may include:

Purchasing or owning a property with an EPC rating of A or B (some accept C with improvement plans).
Providing a valid EPC certificate.
Applying for a residential or, in some cases, a buy-to-let mortgage.
Meeting the lender’s standard affordability and credit criteria.

How Green Mortgages Work

EPC Ratings and Eligibility

In the UK, all homes sold or rented must have an EPC. This rates energy efficiency on a scale from A (most efficient) to G (least efficient). Green mortgage eligibility typically requires an A or B rating, though some lenders consider C-rated homes if energy-efficient improvements are planned.

Incentives Offered by Lenders

Incentives vary but may include:

Interest rates lower than some standard mortgage products.
Cashback upon completion (commonly in the range of £500–£1,000).
Higher loan-to-value (LTV) allowances.
Reduced product or arrangement fees.

Incentive availability and terms depend on lender criteria, borrower eligibility, and property details.

Application Process

Applying for a green mortgage is similar to any other mortgage application, with the added requirement to provide your property’s EPC rating. New-build developers often supply this upfront. For older properties, you may need to commission an EPC assessment.

Leading UK Lenders Offering Green Mortgages in 2025

Several lenders have introduced green mortgage products. Examples include:

Barclays Green Home Mortgage – Available on A or B-rated new-build homes.
Nationwide Green Additional Borrowing – For existing members making qualifying energy-efficiency improvements.
NatWest Green Mortgage – Offers rates and potential cashback for A or B-rated properties.
Virgin Money Green Mortgage – Available for residential and buy-to-let properties meeting EPC criteria.
Halifax Green Mortgage – Includes cashback options for qualifying applicants.

Product details vary and are subject to change. Speak to an FCA-authorised broker or consult the lender directly for current information.

Practical Tips for Securing a Green Mortgage

Check your EPC rating early – Confirm your property’s rating before applying. If it’s below B, explore improvements such as insulation, double glazing, or solar panels.
Compare lenders – Lenders vary in offerings, eligibility criteria, and accepted EPC bands.
Time renovations strategically – Some lenders allow you to apply for a green mortgage after completing qualifying upgrades.
Use FCA-regulated brokers – An FCA-authorised mortgage broker can help identify suitable products and provide regulated advice.
Consider all costs – Lower interest rates are appealing, but review any fees or charges that may impact the total cost.

FAQs

What EPC rating do I need for a green mortgage?

Typically, a rating of A or B is required. Some lenders may accept a C rating if you commit to qualifying energy improvements.

Can I get a green mortgage for a buy-to-let property?

Yes, some lenders offer green mortgage products for energy-efficient rental properties. Terms vary.

Do green mortgages have higher arrangement fees?

Not necessarily. In fact, some lenders reduce or waive fees to encourage uptake—but always review the full cost structure.

Will improving my EPC rating guarantee eligibility?

No. You must also meet the lender’s standard affordability, credit history, and loan criteria.

Are green mortgages only available for new-builds?

No. Many products are available for existing properties, provided they meet the necessary EPC requirements.

Important Information

Your home may be repossessed if you do not keep up repayments on your mortgage.

This article is for general information only and does not constitute financial advice. Always speak to an FCA-authorised adviser before making financial decisions. Product availability and criteria are subject to change. Accurate as of August 2025.