What is a green mortgage?

A green mortgage is a type of home loan that gives you a financial pat on the back for owning an energy-efficient home or planning to make your current place more eco-friendly. Lenders offer lower interest rates, cashback deals or loans targeted at energy efficient improvements to your home. Green mortgages are available for residential homes and buy-to-let properties.

There are two main types of green mortgages. First, you’ve got the ones that reward you just for living in a home with a top-notch EPC rating (that’s A or B). Then there are those that give you a financial boost for making your home more efficient and achieve a higher energy rating - think insulation, switching to a heat pump or replacing draughty windows.

When lending for home improvements to improve energy efficiency, some green mortgage discounts apply once the renovations are done. Others lend in advance of you making your home more energy efficient. Some require that the completed work brings the house to a specific EPC rating. So if you’re keen on green, compare deals today to potentially start saving on your mortgage!

Are you eligible for a green mortgage?

Green mortgages have grown in popularity in recent years and now over half of lenders offer a green mortgage product. Of those that do, the rules can vary between them. Generally, here’s what lenders will check:

Green eligibility

To be eligible for a green mortgage you either need a home that already meets the lender’s criteria, such as a valid Energy Performance Certificate (EPC) rating of A or B, or you are borrowing money on your home to make energy efficient improvements. You can check the EPC register here.

Your income

Lenders will look at what you earn when deciding how much to lend. Typically, you can borrow up to four and a half times your annual income, or combined annual income if applying for a joint mortgage. Some providers may offer you more, so comparing is essential.

Affordability

You'll need to demonstrate that you can comfortably afford all your mortgage payments, in addition to your other financial commitments like bills for your existing borrowing, utilities and childcare, for example.​

A deposit or home equity

You’ll need some cash to put down on your new home as a deposit, or some equity in your current home if you are remortgaging. A lower loan-to-value (LTV) ratio can help you access more competitive rates.

Credit history

Whilst there isn’t a specific credit score required for a mortgage, having a higher score can boost your chances of being approved. It might be worth checking to see if there is anything you can do to improve your report before you apply for a mortgage.

Every lender’s a bit different, so it’s very important to compare your options to find the right fit for your situation.

How much can I borrow with a mortgage?

Many mortgage lenders offer up to around 4.5 times your annual earnings, though some may allow you to borrow more. Going off the typical figure, if you earn £40,000, you might be able to borrow up to £180,000. If you apply jointly with someone earning £30,000, that total could rise to £315,000.

Just bear in mind that your final offer will depend on factors like your affordability, existing borrowing and deposit size. Income’s just part of the picture. Here’s what else a lender might look at when assessing your application:

  • Monthly outgoings: Lenders will consider your regular expenses like bills, credit card payments, and childcare costs to make sure the mortgage is affordable for you both.

  • Affordability stress tests: Lenders will check if you could afford your mortgage if interest rates rise. If you’re borrowing more for things like home improvements, lenders will also want to ensure you can handle the increased payments.

  • Deposit: The more equity or deposit you have, the better your deal. A lower loan-to-value (LTV) ratio can help you access more competitive rates.

  • Creditworthiness: A solid credit report can really boost your chances of approval, so be sure to check it ahead of your application to see if there is anything you can do to improve your score.

One more thing… your home could be repossessed if you don’t keep up repayments on your mortgage, so make sure you’re comfortable with what you can afford before taking the plunge.

What costs should I budget for when arranging a mortgage?

When applying for a mortgage, remember there are a few costs you’ll need to keep in mind to avoid any surprises:

  • Valuation fees: Lenders will want to know your property's value, so they'll arrange a valuation. Costs can vary, but it's wise to budget for this.​

  • Legal fees: Whether it's a solicitor or conveyancer, you'll need legal help to navigate the process.​ Legal fees for home buying are typically around £2,000 (including VAT at 20%), but the exact cost can vary depending on the property and how complex the work is.

  • Local searches: If you’re buying a property, your solicitor will also carry out local searches – usually costing £250–£300.

  • Arrangement fees: Some lenders charge a fee to set up your mortgage. Expect to pay anywhere between £1,000 to £2,000 or more. ​

  • Early repayment charges (ERCs): Planning to pay off your mortgage early? Be aware of potential ERCs, which can apply if you overpay beyond a certain limit.

  • Survey costs: If you're considering a detailed property survey, this will be an additional expense to keep in mind.​

  • Home improvements: If you're releasing equity for renovations, remember to budget for materials, labour, and any unexpected costs.​

By considering all of these costs, you can keep your mortgage process running smoothly without any unexpected financial bumps along the way.

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Page updated on 10th September 2025, Reviewed by Richard Groom