Green mortgages
Get rewarded for buying / living in an energy-efficient home
More than half of lenders offer so-called 'green mortgages'. The idea is you'll be rewarded with a better interest rate or cashback if you're moving into an energy-efficient home or making your property greener. But we've found green mortgages, while often competitive, aren't normally the cheapest deals on the market.
What is a green mortgage?
A green mortgage is meant to increase the appeal of owning an energy-efficient home. On top of it saving on your energy bills, mortgage lenders will give you cashback and/or a better interest rate as a reward for buying/living in an energy-efficient home.
Ten years ago you'd have been hard-pressed to find a single mainstream lender willing to give you preferential treatment on the basis of an energy performance certificate (EPC), but these days most high-street banks do just that via their own version of the green mortgage.
What do you need to do to qualify for a green mortgage?
Green mortgages generally fall into two categories, rewarding you for either:
Living in an energy-efficient home. If the property you're buying or living in has an EPC rating of A or B, you'll get cashback or a better interest rate on your mortgage. This is normally available to homebuyers and, in some cases, remortgagers too.
Carrying out 'energy-efficiency' home improvements. This could be replacing single-glazed windows, upgrading a heating system, installing solar panels, etc. You'll get a discounted interest rate or cashback on any money borrowed to carry these out.
In this era of combating climate change, lenders increasingly see energy-efficient homes as less risky purchases and more likely to hold their value. And if homeowners spend less on energy bills each month, they're less likely to struggle to meet their mortgage repayments.
What is an energy performance certificate?
An energy performance certificate (EPC) indicates how energy efficient a property is and is required whenever a property is built, bought or sold. They last for 10 years.
EPCs use a property rating system of A to G, with A representing the most energy-efficient homes and G the least. New-build properties are often rated A or B, but older properties typically fare worse (90% of pre-1900 homes have a D rating or lower).
Find out a property's EPC rating on Gov.uk if it's in England, Wales or Northern Ireland. Use the Scottish Register for property EPC ratings in Scotland.
There must be an EPC in place when a property is for sale, advertised for renting, or in the process of being built. Some buildings don't require an EPC rating, including:
-
Places of worship (such as a church).
-
Listed buildings.
-
Accommodation intended to be used for less than four months a year.
-
Industrial sites and workshops that do not use a lot of energy.
Read more about the EPC rules on Gov.uk.
It it compulsory to have an EPC?
Is there anything 'green' about the mortgage itself?
While you might get a discounted interest rate or cashback for living in an energy-efficient home or improving energy-efficiency, there's little that's green about the actual mortgage.
You'll still borrow a sum of money and pay it back each month, with the interest going into your lender's pocket for it to invest. What's more, a green mortgage doesn't mean the mortgage lender isn't investing in environmentally-damaging industries, such as fossil fuels.
To choose a lender based on its green credentials, the Bank Green website can help.
Which lenders offer green mortgages?
Here are some major lenders currently offering green mortgages:
Nationwide. Offers £500 mortgage cashback if buying a property with an A EPC rating, or £250 if it's B-rated. You can also borrow between £5,000 and £20,000, interest-free on a two or five-year fixed deal, to carry out green home improvements.
Barclays. Offers a better interest rate if you buy a new-build home direct from a builder or developer that has an EPC rating A or B. And existing Barclays mortgage borrowers can get a reward of up to £2,000 for making green home improvements to their home.
Co-operative Bank. Offers a better interest rate if you're buying a property with an EPC rating of A or B and where your loan-to-value is between 80% and 95%.
Halifax. Offers £250 cashback if you're buying or remortgaging a home with an A or B EPC rating, or up to £2,000 cashback if borrowing money for green home upgrades.
HSBC. Up to £1,000 cashback if buying/remortgaging a home with an A or B EPC rating.
NatWest. Offers a better interest rate if you buy or remortgage a property with an EPC rating A or B and where your loan-to-value is 85% or less.
TSB. Offers £250 cashback if buying a home with an EPC rating of A or B.
Virgin Money. Offers a better interest rate if you buy a new-build home with an EPC rating of A or B and where your loan-to-value is 85% or less. And existing borrowers can get £250 cashback if you borrow money to make green home improvements.
Leeds Building Society. Offers a better interest rate if you're an existing mortgage holder and want to borrow extra money in order to carry out green home improvements.
Do smaller lenders offer green mortgages?
Some smaller lenders offer their own versions of a green mortgage, such as:
Kensington Mortgages. Up to £500 cashback if you buy a home with an A or B rating.
Swansea Building Society. Offers a better interest rate if you buy, remortgage or product transfer a home with an EPC rating of A or B.
Gatehouse Bank. A sharia-compliant lender which offers a preferential rental rate if you're buying or remortgaging a home with an EPC rating of A or B, plus it'll offset the property's carbon footprint for the duration of a mortgage deal.
Are there any truly green mortgage lenders?
Ecology Building Society is arguably the only lender that can be considered genuinely 'green'. It describes itself as 'dedicated to a green society' by providing mortgages that 'respect the environment'. It's also one of the few banks and building societies which scores more than 15 out of 20 on Ethical Consumer's lender rating system.
The closest Ecology offers to a mainstream mortgage is its eco home mortgage, available if you're purchasing or mortgaging an energy-efficient home – including homes that high-street lenders may not lend on. You need a minimum deposit or equity of 20% to qualify.
Ecology might also be able to help finance a green renovation or conversion, as well as finance woodland projects and canal boat mooring projects.
Interest rates on Ecology's mortgages are normally more expensive than those from high-street lenders, so you'll likely pay a premium. But your home may qualify for its 'C-Change' discount off the mortgage interest rate, which can make a mortgage cheaper.
Green mortgage deals can normally be beaten on rate
Even with the incentives, the reality is green mortgages are not normally the cheapest deals on the market.
Yes, a better interest rate and/or cashback might mean a green mortgage deal is cheaper than equivalent non-green mortgage deals from the same lender.
However, compared to equivalent non-green mortgage deals on the wider market, we've rarely found green mortgage deals working out the cheapest. And where a green mortgage does work out cheaper, it's rarely by a significant margin.
See how some green mortgages compare to market-leading non-green mortgage deals:
Loan-to-value | Green/Non-green | Interest rate + set-up fees | Monthly payment | Cost over two years (3) |
|---|---|---|---|---|
60% | Non-green (First Direct) | 3.78% + £490 | £619 | £15,344 |
60% | Green (Virgin Money) | 4.22% + £1,020 | £648 | £16,496 |
75% | Non-green (Yorkshire BS) | 3.84% + £995 | £779 | £19,604 |
75% | Green (NatWest) | 4.06% + £1,025 | £797 | £20,032 |
90% | Non-green (Furness) | 4.25% + £1,024 | £975 | £24,398 |
90% | Green (Barclays) | 4.87% + £35 | £1,039 | £25,030 |
(1) On a £200,000 property.
(2) Correct as of September 2025
(3) Includes fees and any cashback.
As the table above shows, the cost of a green two-year fixed mortgage deal is typically more expensive than the cheapest equivalent non-green deal on the wider market.
For example, if you bought a £200,000 property with a 25% deposit – meaning your loan-to-value is 75% – a two-year fixed green mortgage deal from NatWest would cost around £400 more over the two years than the cheapest equivalent non-green mortgage (Yorkshire BS).
And the table below shows that if you fixed for five years on a £300,000 property, a Virgin Money green mortgage at 60% loan-to-value would cost you £2,700 more compared to the cheapest equivalent non-green mortgage (First Direct) over that time.
Loan-to-value | Green/Non-green | Interest rate + total fees | Monthly payment | Cost over five years (3) |
|---|---|---|---|---|
60% | Non-green (First Direct) | 3.90% + £490 | £940 | £56,900 |
60% | Green (Virgin Money) | 4.27% + £1,020 | £977 | £59,615 |
75% | Non-green (First Direct) | 3.99% + £490 | £1,186 | £71,675 |
75% | Green (Barclays) | 4.04% + £934 | £1,193 | £72,520 |
85% | Non-green (Furness) | 4.26% + £1,024 | £1,464 | £88,745 |
85% | Green (NatWest) | 4.25% + £995 | £1,462 | £87,720 |
(1) On a £300,000 property.
(2) Correct as of September 2025
(3) Includes fees and any cashback.
On the other hand, living in an energy-efficient home will help save money on your energy bills, which you could see as offsetting being on a more expensive green mortgage rate. Plus of course living in an energy-efficient home will theoretically benefit the planet.
So don't think we're saying green properties aren't worth it. Rather, don't automatically plunk for a green mortgage without first checking if there are cheaper deals elsewhere.
To see the best mortgage deals currently on the market, use our Mortgage Best Buys tool.
How to apply for a green mortgage
Applying for a green mortgage is very similar to applying for a normal residential mortgage. Here's how to do it...
Step 1: Boost your mortgage chances
Before applying for any kind of mortgage, you should try improving your chances of mortgage acceptance and preparing yourself for the process. We suggest:
Reading our First-time buyers' guide. It explains all about the homebuying process. If you already own a home, read our Remortgage guide instead.
Reading our Boost your mortgage chances guide. This has got our top tips on making yourself attractive to mortgage lenders.
Step 2: Make an offer on an energy-efficient property
You'll need to have an offer accepted on a property in order to apply for a mortgage. Remember, the property will also need an EPC rating of A or B for a green mortgage.
Where the money you're borrowing is for energy-efficiency upgrades to your current home, you'll likely need to explain how your property will become more energy efficient instead.
Step 3: Find your best mortgage deal
Once you've had an offer accepted, you'll need to apply for a mortgage. Use our Mortgage Best Buys tool to benchmark what kind of rate you might be able to get, though our tool doesn't have the ability to distinguish between green and normal mortgages.
Then we recommend speaking to a mortgage broker, as they will be able to highlight green mortgages specifically for you and check whether you'd save money by getting a non-green mortgage instead. See how to speak to a good broker in our Cheap mortgage finding guide.
Further mortgage help
Not sure how a mortgage works? See our
First-time buyers' guide. Step-by-step getting on the ladder.
Which mortgage to choose? There are different types.
Buying a new-build home. Top tips and what to look out for.
Want more green tips?
27 ways to go green and save. We explain how.
Green savings accounts. Earn up to 3% interest.
Share this guide?
