I got a £1,000 discount on my home AND save money on my bills – it was so easy and you can do it too
VICKI Kelly and her partner Matt Clement were thrilled when they bagged £1,000 in cashback from Halifax by agreeing to make their home “greener”.
The couple, both 47, took the £1,000 cash back offer after agreeing to use a government grant to get a heat pump following a chat with their mortgage adviser.
Living in a detached bungalow in Hengistbury Head, Bournemouth, they told The Sun she hopes the heat pump will save them money on bills this winter, too, as they now heat their home more efficiently than with their old gas boiler.
Vicki, who runs a dog walking business, said: “The combination of the grant plus the cashback we got covered the £12,000 cost of the heat pump.
“The grants have come down since we took ours out so we got a good deal.”
They received the money from Halifax 10 days after submitting receipts for the heat pump.
The couple are one of thousands of borrowers taking advantage of increasingly generous incentives from banks to make their homes more energy-efficient.
Free cash for home improvements, discounted mortgage rates for the greenest homes and more flexible affordability rules that allow you to borrow extra are some of the rewards on offer to homeowners who agree to make changes.
But to qualify, there are often strings attached – and not everyone is eligible.
Below, we have rounded up all the banks’ best offers and the hoops you must jump through to get them.
What is a green mortgage?
A green mortgage either rewards you for already having an “energy efficient” home, or offers you an incentive to improve your home’s efficiency.
You can tell if your home is efficient by checking your Energy Performance Certificate (EPC), which has a rating from A the most efficient to G the least.
It also has handy tips to help you improve your rating. If you don’t already have one, you can instruct an assessor to carry one out.
Between 2019 and 2024 the number of green deals has rocketed from four to over 60 today, according to the Green Finance Institute (GFI), and the perks keep getting better.
Will Rhind, vice president of mortgage advice and growth at Habito, said: “There are plenty of deals offering cashback and discounts for green properties with an A or B rating already, however, it’s great to see more innovation from lenders in recent months encouraging borrowers to improve the efficiency of their homes.”
Why are lenders incentivising homeowners to go green?
Mortgage lenders are under pressure from the financial watchdog to improve the energy efficiency of the homes they lend on so that the country can meet its net zero carbon emissions target by 2050.
Lenders are also concerned about how the effects of climate change may cause the value of properties to fall or impact borrowers’ ability to pay their mortgage if, for example, their insurance premiums increase after bad weather like flooding.
Discounted mortgage rates
Discounted rates were the first wave of green deals to hit the shelves.
The discount is typically 0.10 percentage points lower than the lender’s standard equivalent rate.
It is offered to borrowers who buy homes that already have an EPC rating of A or B. New lender Perenna and Saffron Building Society offer a discount to homeowners who do not live in efficient homes but want to improve them.
The discount is applied if approved upgrades, such as solar panels or an air source heat pump, are completed with a set timeframe.
Nationwide wins the gong for best discounted mortgage rate within its Green Additional Borrowing deal.
If you’ve already had a Nationwide mortgage for six months you can apply for a second mortgage at 0% fixed for two or five years to make green home improvements. Borrowing is capped at £15,000 and you’ll be asked for a quote for the work being done at the application stage.
Keen to be green
When Emma Thorpe-Bailey’s oil-fired boiler in her 1980s bungalow needed replacing, she chose an environmentally-friendly option.
After doing her research, town planner Emma, 32, decided an air source heat pump would be the best option for the home she bought in 2022 with her husband near Martlesham in Suffolk.
Already Nationwide mortgage customers, the couple decided to use the building society’s 0% Green Additional Borrowing mortgage.
“We also needed to install some extra insulation so that the pump operated efficiently which put our finances under pressure,” said Emma. “Finding the green 0% Nationwide loan was the catalyst for us to do all the work necessary.”
They borrowed £15,000 which will be repaid over the next five years at £250 a month interest free and added £7,000 of their own money to cover all costs. They’ll save £250 a year on their energy bills.
Cashback incentives
Virgin Money is offering a whopping £15,000 free cash as soon as your mortgage is finalised through its Retrofit Boost deal to new borrowers who fix their rate for 10 years using a mortgage broker. You’ll get the money straight after the mortgage completes. You can choose to fix for five years or seven years and get £3,000 or £10,000 instead.
The Retrofit Boost interest rate is higher than Virgin Money’s standard rates.
Other generous cash back deals include Halifax’s Green Living reward upped from £1,000 to £2,000 last month, paid if an eligible improvement is completed within one year of taking out the mortgage. You’ll need a Halifax or Bank of Scotland current account at point of claim.
HSBC increased its energy efficiency cash back in June for owners of A and B rated homes from £500 to £750 for two and three-year deals and £1,250 for five-year deals.
Affordability perks
Lenders Leeds Building Society and Accord Mortgages are offering more generous loan amounts to borrowers who have bought a new-build home with an A or B rating.
“Energy efficient properties should have lower utility bills in comparison to older homes,” added Mr Rhind.
“Leeds BS, for example, is using data about projected fuel bill savings on new build homes which means it can increase the amount homeowners can borrow by up to £11,000.”
Seek advice from a mortgage broker about the best green mortgage deal for your home and circumstances.