How far will your mortgage take you along the road to an eco-friendly future?

Some plant trees on your behalf; others demand you meet strict energy-saving targets. Amanda Hall Davis on the lenders who've gone green

The reality of climate change is becoming more evident every year – a fact not lost on the financial services industry, which is busy promoting products such as "green" mortgages. But, setting aside the hype, is it really possible to reduce your carbon footprint through your choice of home loan? Critics claim that, even if such mortgages become mainstream, their limitations and cost to the consumer could far outweigh the environmental benefits.

The decision to take out any mortgage, green or otherwise, should not be made lightly. The repayments will form the biggest part of your monthly household expenses, making it essential to compare interest rates and other fees before you sign up to a deal. Remember, too, that your current lender may be willing to help you finance environmentally friendly home improvements.

There is no standard definition of what makes a green mortgage, and the terms and conditions will vary according to the individual lender. However, many such products work by offering financial incentives – such as cashback, a lower rate of interest, or the waiving of fees or early repayment charges – with the aim of helping homeowners reduce the amount of energy they use. Some lenders will give you a discount on their standard variable rate if your home is energy efficient or if you are borrowing to invest in environmentally friendly improvements. Only seven lenders out of the UK's top mortgage providers presently offer green mortgages as defined by the Energy Efficiency Partnership for Homes, where "the [advantage, discount or cashback] is tied to the energy efficiency of your home, often in the form of a loan to carry out specific measures such as the installation of solar panel technology".

Those who make the grade include the Co-operative Bank, the Norwich & Peterborough, Yorkshire, Ecology, Kent Reliance and Teachers building societies and the Ulster Bank. The Co-op and Norwich & Peterborough both offer a carbon offset element to their green mortgage products.

The green incentive from Norwich & Peterborough is renewed every five years for the term of your mortgage. The lender will plant eight trees a year on your behalf to make your home more carbon neutral.

The Co-op Bank claims that all its mortgages are ethical. It makes an annual contribution to help fight climate change for each new mortgage taken out, funding projects around the world. It also offers a free home energy report for you to gauge the energy efficiency of your property. The standard variable rate (SVR) is 6.99 per cent with discounts available.

Perhaps the greenest lender is the Ecology building society, which will lend only to borrowers committed to reducing their carbon footprint. It currently offers a rate of 6.45 per cent on residential mortgages, with a further reduction for the life of your mortgage to 5.45 per cent if your home meets strict government standards for energy efficiency. The building society also offers a "C-change" incentive for new buyers – 1 per cent discount off its SVR on funds borrowed to install energy-efficiency measures or renewable energy systems. These include floor, wall and roof insulation, double or triple glazing, condensing boilers, solar water heaters and wind turbines.

Making the necessary improvements to qualify for such a reduction in your mortgage costs could set you back thousands of pounds, and going down the green road requires careful thought beforehand. Once the work is done, however, environmentally friendly changes will reduce your energy bills substantially and could make a big difference if you come to sell. For example, a study carried out last year by the Nationwide building society found that potential buyers were more attracted by a property with solar panels than by period features or attic rooms.

Finacial products from our partners
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    SThree: Trainee Recruitment Consultant

    £20000 - £25000 per annum + competitive: SThree: Did you know? SThree is a mul...

    Guru Careers: C# Project Team Lead

    £55 - 65k (DOE): Guru Careers: A unique opportunity for a permanent C# Develop...

    Guru Careers: Graduate Editor / Editorial Assistant

    £16 - 20k: Guru Careers: A Graduate Editor / Editorial Assistant is needed to ...

    Guru Careers: Software Developer / C# Developer

    £40-50K: Guru Careers: We are seeking an experienced Software / C# Developer w...

    Day In a Page

    Raif Badawi: Wife pleads for fresh EU help as Saudi blogger's health worsens

    Please save my husband

    As the health of blogger Raif Badawi worsens in prison, his wife urges EU governments to put pressure on the Saudi Arabian royal family to allow her husband to join his family in Canada
    Birthplace of Arab Spring in turmoil as angry Tunisians stage massive sit-in over lack of development

    They shall not be moved: jobless protesters bring Tunisia to a halt

    A former North African boom town is wasting away while its unemployed citizens stick steadfastly to their sit-in
    David Hasselhoff's new show 'Hoff the Record': What's it like working with a superstar?

    Hanging with the Hoff

    Working with David Hasselhoff on his new TV series was an education for Ella Smith
    Can Dubai's Design District 'hipster village' attract the right type of goatee-wearing individualist?

    Hipsters of Arabia

    Can Dubai’s ‘creative village’ attract the right type of goatee-wearing individualist?
    The cult of Roger Federer: What is it that inspires such obsessive devotion?

    The cult of Roger Federer

    What is it that inspires such obsessive devotion?
    Kuala Lumpur's street food: Not a 'scene', more a way of life

    Malaysian munchies

    With new flights, the amazing street food of Kuala Lumpur just got more accessible
    10 best festival beauty

    Mud guards: 10 best festival beauty

    Whether you're off to the Isle of Wight, Glastonbury or a local music event, we've found the products to help you
    Unai Emery’s passion for winning and eye for a bargain keep Seville centre stage in Europe

    A Different League

    Unai Emery’s passion for winning and eye for a bargain keep Seville centre stage in Europe, says Pete Jenson
    Amir Khan and James DeGale’s remarkable Olympic performances were just the start of an extraordinary journey - Steve Bunce

    Steve Bunce on Boxing

    Amir Khan and James DeGale’s remarkable Olympic performances were just the start of an extraordinary journey
    Abuse - and the hell that came afterwards

    Abuse - and the hell that follows

    James Rhodes on the extraordinary legal battle to publish his memoir
    Why we need a 'tranquility map' of England, according to campaigners

    It's oh so quiet!

    The case for a 'tranquility map' of England
    'Timeless fashion': It may be a paradox, but the industry loves it

    'Timeless fashion'

    It may be a paradox, but the industry loves it
    If the West needs a bridge to the 'moderates' inside Isis, maybe we could have done with Osama bin Laden staying alive after all

    Could have done with Osama bin Laden staying alive?

    Robert Fisk on the Fountainheads of World Evil in 2011 - and 2015
    New exhibition celebrates the evolution of swimwear

    Evolution of swimwear

    From bathing dresses in the twenties to modern bikinis
    Sun, sex and an anthropological study: One British academic's summer of hell in Magaluf

    Sun, sex and an anthropological study

    One academic’s summer of hell in Magaluf