If you are looking to buy or build an energy-efficient home — or to improve your home’s current energy rating — then you may have considered the idea of green mortgages.
But what exactly is a green mortgage? How do you avail of one and what are the benefits?
To help, we’ve put together this guide to help you decide if it’s the right choice for you.
What are green mortgages and how do they work?
A green mortgage offers lower interest rates for people who buy energy-efficient homes or a discount on a standard-rate mortgage.
Green mortgages work the same way as any other mortgage apart from the lower interest rates.
Who is eligible for green mortgages?
The same eligibility criteria apply for green mortgages and standard mortgages, meaning that first-time buyers, second and subsequent buyers, switchers and those building their own homes can all qualify for a green mortgage — provided that the house has a Building Energy Rating (BER) of B3 or higher.
The higher the BER, the more energy-efficient the property is. An A-rated home is easier and cheaper to heat and has a smaller carbon footprint. A G-rated home requires more fuel to keep it warm and does not retain the heat very well.
It is a legal requirement that all new builds from 2007 onwards must have a BER certificate, and the details must be included in the advertisement for the property.
If you wish to upgrade your home’s BER to a B3 or higher, you can usually avail of a green mortgage from your current lender. There are also lots of grants available to help you make your home more energy-efficient.
Where can I get a green mortgage?
In Ireland, there are five lenders currently offering green mortgages: AIB, EBS, BOI and Permanent TSB.
At present, none of these offers a green variable rate — AIB, EBS, Haven, and Permanent TSB offer a green rate on some of their fixed-rate mortgages only.
Here is a brief comparison of the green mortgages on offer:
|Lender||Mortgage||Interest Rate||Length of repayment term||
|AIB||Green 5 Year Fixed Rate||From 2.15%||5 years|
|EBS||Green 4 Year Fixed Rate||From 2.1%||4 years|
|BOI||Green Mortgage||Discount of 0.30%||1-10 years|
|Permanent TSB||Green 5 Year Fixed Home Loan||Discount of 0.20%||5 years||
Available to those with an LTV of 80% or less and a mortgage of more than €250,000
|Haven||Green 4 year Fixed rate||From 2.0%||4 years|
What are the pros and cons of green mortgages?
Like anything else, green mortgages have their advantages and disadvantages. Every prospective homeowner or home improver will have different priorities, so it is important to keep these in mind when comparing your options.
- Opting for a green mortgage and an energy-efficient home will put more money in your pocket while lowering your carbon footprint
- It will also be easier to sell than a home with a low BER rating
- Even with the help of grants, upgrading your home to a higher BER rating will be costly
- Green mortgages are not necessarily the cheapest on the market
- You may no longer qualify for other discounts or offers from the lender
- There is a limited amount of green mortgages available
Are green mortgages actually doing anything for the planet?
As consumers become increasingly conscious of environmental issues and actively seek to reduce their impact, it is common for businesses and large corporations to try to capitalise on this in a practice known as ‘greenwashing’.
Greenwashing refers to marketing strategies that are designed to make people believe that the company and/or their products are environmentally friendly. In reality, this is usually far from the truth.
While it may be true that they offer more of an incentive for people to buy energy-efficient homes, green mortgages in and of themselves do not do anything for the environment. All they do is offer people a lower interest rate for choosing an energy-efficient home.
Are green mortgages worth it?
A green mortgage is certainly worth considering, especially if an energy-efficient home is within your budget. However, it is important to bear in mind that even with a discount it may not be the cheapest option out there.
Depending on the size of your deposit or mortgage, you may be able to get better value on a standard, ‘non-green’ mortgage.
Before you make your decision, check that the fixed rate term is right for you and that you’re not missing out on any other deals like cashback or bigger discounts.
The best way to do this is to speak to an experienced mortgage advisor who will go through your options and help you decide what’s best for you.
Symmetry Financial is your trusted mortgage advisor
No matter the type of mortgage, Symmetry Financial Management will always strive to be your impartial, authoritative source for mortgage advice.
To find out if a green mortgage is right for you, get in touch with our dedicated team today and book a no-fee consultation to find out more.