Introduction to Green Mortgages
With so much information available on global warming, in recent years, it is no surprise that some lenders have started to look at the option of providing borrowers with 'green mortgages'. The theory is that a green mortgage will help to negate the impact of house building on the environment.
Theory of Green Mortgages
A green mortgage provider will normally require that certain parameters are met with regards to environmentally friendly technology such as the installation of solar powered heating. Similarly, there will be an ongoing requirement to meet various criteria such as carbon emissions, in order to continue to benefit from favourable green mortgage rates.
Apart from the traditional green mortgage, there is also a wide range of ethical mortgages available that have a broader remit. For example, an ethical mortgage may be provided in a way that ensures a percentage of all profits are reinvested into an ethically sound cause such as re-forestation.
Green Mortgage Benefits
From a borrower's point of view, a green mortgage can have several potential benefits. Firstly, by taking a green mortgage, the borrower can be certain that they have a property which is not damaging the environment.
Furthermore, many lenders may offer incentives for environmentally friendly technology, thus offsetting the financial costs of installing items including solar panels or added insulation. Apart from the potential interest savings with a green mortgage, there will also be additional, on-going savings through lower utility bills.
Disadvantages of a Green Mortgage
Currently, only three lenders provide green mortgages which may restrict the options in terms of discounted rates, variable rates or fixed mortgages.
By selecting a green mortgage, you may find that you are unable to take advantage of other available deals from different mortgage providers. Therefore, it is always worth doing a comparison with other providers, if one of the reasons for taking a green mortgage is to save cash.
In addition, there are several fairly stringent requirements in order to qualify for a green mortgage, many of which can only be achieved if planning a property from scratch. Converting an old property may simply not be worth the financial input.
Green mortgages are available from a limited number of providers and are specifically aimed at properties that are considered 'green';
providers will require that your property meets certain criteria such as levels of carbon emissions or the installation of solar panels;
consider the financing aspect carefully, as renovating an old property may cost more than would be viable; therefore, green mortgages are often only appropriate for new build properties.