Last reviewed: June 2026
TL;DR- Green mortgages offer lower interest rates or cashback for properties with an EPC (Energy Performance Certificate) rating of A or B.
- The discount is typically 0.1-0.2% below the standard equivalent rate, though some lenders offer more.
- Some lenders also offer green additional borrowing at a preferential rate for energy efficiency home improvements.
- The green mortgage market has grown significantly since 2020 - most major lenders now offer at least one green product.
What Is a Green Mortgage?
A green mortgage is a mortgage product that offers a financial incentive - typically a lower interest rate or cashback - for properties that meet a defined energy efficiency standard. Most green mortgage products in the UK require the property to have an EPC rating of A or B. The rationale from the lender's perspective is that energy-efficient properties are cheaper to run, have lower energy bills and may be more resilient to future regulatory or energy cost changes - making the borrower slightly lower risk and the property more marketable.
Green mortgages are sometimes also called sustainable mortgages, eco mortgages or energy-efficient mortgages. The product structures and criteria vary between lenders.
EPC Requirements
An Energy Performance Certificate (EPC) rates a property's energy efficiency on a scale from A (most efficient) to G (least efficient). Most green mortgage products require an EPC rating of A or B, which represents a small proportion of the existing UK housing stock - the majority of homes are rated C, D or below. New build properties are much more likely to achieve an A or B rating, making green mortgages particularly relevant for new build purchases. Older properties that have been retrofitted with insulation, heat pumps, solar panels and other energy efficiency measures may also achieve B ratings.
Green Additional Borrowing
Some lenders offer green additional borrowing - a further advance at a preferential rate specifically for funding energy efficiency improvements to the property. Qualifying improvements typically include: cavity or solid wall insulation; roof insulation; heat pumps; solar panels; double or triple glazing; and other measures that improve the EPC rating. The borrower must demonstrate the funds will be used for qualifying improvements, and some lenders require post-improvement EPC evidence.
How Much Is the Green Discount Worth?
The discount offered on green mortgage products is typically modest - 0.05% to 0.25% below the equivalent non-green rate. On a £200,000 mortgage, a 0.1% rate discount saves approximately £200 per year. Cashback offers of £250-£1,000 at completion are also common on green mortgage products. The financial benefit is real but modest relative to the overall mortgage cost - the primary driver for purchasing an energy-efficient property should be the lower running costs and environmental impact rather than the mortgage incentive alone.
Government and Regulatory Context
The UK government has set targets for improving the energy efficiency of UK homes, with proposals (at various stages of policy development) to require rental properties to achieve a minimum EPC C rating. For owner-occupiers, there are no mandatory minimum EPC standards for existing homes. The green mortgage market is partly a response to this policy direction and partly a commercial product development by lenders seeking to align with ESG objectives. UK Finance and the Mortgage Finance Gazette track the growth of the green mortgage market, which has expanded significantly since 2020.
Frequently Asked Questions
Does my property need a current EPC to qualify for a green mortgage?
Yes. An EPC is required to verify the property's energy efficiency rating. EPCs are valid for 10 years from the date of issue. If the property's EPC is out of date or below the required rating, a new EPC will need to be commissioned before the green mortgage application can proceed. EPCs are carried out by accredited assessors and registered on the national EPC register.
Can I get a green mortgage if I plan to improve the property's energy efficiency after purchase?
Some lenders offer products where the green rate applies from the outset on properties that are close to a B rating, conditional on the borrower carrying out defined improvements within a set period. Others require the A or B rating to be in place at the point of application. Where a green additional borrowing facility is offered, the borrower can fund the improvements through the mortgage and potentially upgrade the EPC rating over time. Specific product terms should be checked.
Are green mortgages available for buy-to-let properties?
Yes. Green BTL mortgage products are available from some lenders for energy-efficient rental properties. The BTL green mortgage landscape is less developed than the residential market but has grown. Given the government's direction on minimum EPC standards for rented properties, green BTL mortgages are commercially relevant for landlords managing future compliance risk.
Is a heat pump installation enough to qualify for a green mortgage?
A heat pump can improve a property's EPC rating but whether it is sufficient to achieve an A or B rating depends on the property's existing insulation levels, glazing, and other energy efficiency features. A heat pump in a poorly insulated property may not lift the rating to B. The EPC must be updated after the installation is complete. An accredited assessor can advise on what combination of measures is needed to achieve the target rating for a specific property.
