Last reviewed: June 2026
TL;DR- Energy efficient mortgages reward borrowers purchasing or improving energy efficient properties with lower rates, cashback or preferential borrowing for improvements.
- The European Mortgage Federation's Energy Efficient Mortgage Initiative (EEMI) has influenced product development across UK and European lenders.
- UK lenders typically require EPC A or B for the full green rate; some offer transitional products for properties rated C or undergoing improvement.
- Government retrofit schemes (Great British Insulation Scheme, Boiler Upgrade Scheme) complement rather than replace energy efficient mortgage products.
Energy Efficient Mortgages in Context
Energy efficient mortgages sit within the broader green finance movement, which links the cost of capital to environmental performance. The European Mortgage Federation's Energy Efficient Mortgage Initiative (EEMI) established principles for energy efficient mortgage products across European markets, including the UK. Under EEMI principles, lenders offer preferential terms for energy efficient properties or for borrowers committing to energy efficiency improvements.
In the UK, energy efficient mortgages overlap significantly with what lenders market as green mortgages - the distinction is primarily one of framing. An energy efficient mortgage emphasises the property's measured energy performance (typically EPC rating) as the qualifying criterion.
Products for Improvement as Well as Purchase
Unlike pure purchase-focused green mortgages, some energy efficient mortgage products include a facility for financing improvements to sub-standard properties. A borrower purchasing a property rated D or E might access a standard mortgage plus a preferential rate tranche specifically for insulation, glazing or heat pump installation. Some lenders structure this as a conditional rate improvement: the standard rate applies until the improvements are made and a new EPC is obtained, at which point the rate improves.
Government Retrofit Schemes
Government energy efficiency grant schemes - the Great British Insulation Scheme, the Boiler Upgrade Scheme and predecessors including the Green Homes Grant - provide grants rather than loan finance for energy improvements. These are separate from energy efficient mortgage products but can be combined with them: a homeowner might use a government grant to fund part of an improvement project and an energy efficient mortgage top-up or further advance to fund the remainder. The current availability and terms of government schemes should be confirmed on GOV.UK.
Retrofit Finance as a Growing Market
The scale of energy efficiency improvement needed across the UK's predominantly older housing stock has driven interest in retrofit finance - lending specifically designed to fund energy improvement projects. Some specialist lenders and initiatives, including those backed by public finance bodies, offer retrofit loan products at preferential rates. The UK Infrastructure Bank and Homes England have explored mechanisms to scale up retrofit finance. This is a developing area and the product landscape continues to evolve.
Frequently Asked Questions
What is the European Energy Efficient Mortgage Initiative?
The Energy Efficient Mortgage Initiative (EEMI) is a project led by the European Mortgage Federation and the European Covered Bond Council to develop a standardised framework for energy efficient mortgages across Europe. UK lenders participated in EEMI pilot programmes. The initiative established principles for linking mortgage rates to property energy performance and for tracking the environmental impact of energy efficient mortgage portfolios. Post-Brexit, UK lenders continue to develop their own green and energy efficient mortgage products influenced by EEMI principles.
Can I get a better rate if I improve my property's EPC rating during the mortgage term?
Some lenders allow borrowers to apply for a rate improvement or switch to a green product rate if they improve their property's EPC rating to A or B during the mortgage term. The process typically requires a new EPC to be obtained and submitted to the lender. Whether a rate improvement is available and how the process works varies by lender and product - this should be checked with the specific lender before committing to improvement expenditure on the assumption of a rate benefit.
Are energy efficient mortgages available for landlords?
Yes. Some BTL lenders offer preferential rates or cashback for energy efficient rental properties (EPC A or B). Given government direction toward minimum EPC standards for rented properties, energy efficient BTL mortgages are commercially relevant for landlords seeking to manage future compliance risk while accessing competitive finance. The available products should be checked through a BTL specialist broker.
Do solar panels always improve an EPC rating enough to qualify?
Solar panels improve a property's EPC rating by contributing to the energy generated on site, which reduces the property's net energy demand. Whether they are sufficient to move a property to a B rating depends on the existing fabric of the building - insulation levels, heating system, glazing. A poorly insulated property with solar panels may still only achieve a C or D. Professional EPC assessment before and after installation provides the definitive answer for a specific property.
