There are many existing green home options, Nationwide has also launched a 0% interest loan of up to £15,000 customers who are improving the energy efficiency of their homes and have exising mortgages with them.
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Nationwide is offering 5,000 existing mortgage customers the opportunity to borrow up to £15,000 for green home improvements, without paying interest
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The money must be used to fund non-structural, energy-efficient home improvements, such as installing solar panels or an air source heat pump, window or boiler upgrades, or cavity wall or loft insulation
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The new 0% Green Additional Borrowing product will be available from 1 June 2023
- Over 15 lenders offer green mortgages, including Halifax, Lloyds Bank, Barclays and Royal Bank of Scotland.
Nationwide building society has launched an interest-free loan to encourage homeowners to make green improvements to their property.
Nationwide is offering 5,000 existing mortgage customers the opportunity to borrow up to £15,000 without paying interest on the money.
It is the first time the building society has offered homeowners a 0% mortgage product to support decarbonising of the UK’s housing stock.
The new 0% Green Additional Borrowing product, which will be available from 1 June, aims to encourage people to make their homes more energy efficient.
Henry Jordan, director of home at Nationwide Building Society, said: “Residential properties are one of the biggest causes of emissions and there is a need for more to be done by government and business to encourage households to act.
“By launching this latest product for up to 5,000 of the society’s mortgage holders, we can test and understand whether offering zero per cent interest will encourage members to make the necessary green home improvements, where the costs of finance may have, until now, discouraged them.”
Why is this happening?
The UK’s 29 million homes are responsible for producing 16% of the country’s carbon emissions.
Many properties will need to be retrofitted to make them more environmentally friendly if the UK is to meet its net zero target by 2050.
While Nationwide has only a limited ability to reduce emissions on the properties it lends on, it hopes that waiving interest on its Green Additional Borrowing product will incentive homeowners to make energy efficient home improvements.
How does the product work?
The product enables existing mortgage customers to borrow an additional £5,000 to £15,000.
The loan, when combined with the existing mortgage, must not exceed 90% of their property’s total value.
The money must be used to fund non-structural, energy-efficient home improvements, such as installing solar panels or an air source heat pump, window or boiler upgrades, or cavity wall or loft insulation.
The loan can also be used to pay for the installation of an electric car charging point.
The product can be taken out over a two-year or five-year term. It charges 0% interest for the fixed term of two or five years, after which interest will be charged at Nationwide’s standard mortgage rate, which is currently 7.74%.
If someone borrowed £15,000 over 15 years through the new 0% Green Additional Borrowing product, they would have monthly repayments of £250.
Under Nationwide’s existing Green Additional Borrowing product, which charges interest of 3.89%, they would pay £275.50. So the new product will save borrowers £1,530 over the term of the loan.
What other green mortgage products are available?
Nationwide isn’t the only lender to be offering homeowners discounted rates to make green improvements to their home.
More than 15 lenders currently offer green mortgages, including high street names such as Halifax, Lloyds Bank, Barclays and Royal Bank of Scotland.
Green mortgages reward people for buying an energy-efficient home or carrying out improvements to make their property more environmentally friendly, through offering a lower interest rate or cashback once the improvement has been carried out.
Interest rates on green mortgages currently start at 3.76% for a five-year fixed rate mortgage.
As a general rule, green mortgages tend to be more expensive than if you scoured the market for the best deal available, but they are often cheaper than the comparable rate offered by the same lender.
What other help is available to make my home more energy efficient?
There are a number of schemes to help you carry out energy efficiency home improvements.
If you own a home in England or Wales, you may be able to get £5,000 towards the cost of an air source heat pump or biomass boiler under the government’s Boiler Upgrade Scheme. Alternatively, you could get £6,000 towards the cost of a ground source heat pump.
Meanwhile, the Green Homes Grant Local Authority Delivery Scheme offers grants averaging £10,000 to homeowners to install solar PVs, air source heat pumps, and loft, underfloor, external wall and cavity wall insulation.
To qualify, you must have a household income of less than £30,000 a year and your home must have an Energy Performance Certificate rating of D, E, F or G.
Applications for the scheme are made through your local council.
If you’re claiming certain benefits, energy companies have an obligation to help you under the Energy Company Obligation scheme.
The scheme will pay for loft or cavity wall insulation (as long as it’s suitable for your home), double glazing, and even a new boiler if your current one has broken.
We have covered many home improvement ideas and guides in the past and you can find them here.
