Nationwide building society announced on the 15th of May 2023 that they would soon be introducing a new green 0% mortgage product for additional borrowing on properties. What does this mean exactly? Well it doesn’t mean that you won’t have to pay anything at all on your mortgage. Unfortunately. However, it does mean that for people looking to remortgage and borrow additional funds to make their properties more eco friendly, Nationwide will be able to offer a zero percent interest loan. This scheme has now been officially launched by Nationwide, and subscribing brokers such as Oportfolio can start to offer this to clients.
New 0% Mortgage Product For Additional Green Borrowing
So as we have already mentioned, Nationwide will now offer a zero percent loan to borrowers looking to take out additional borrowing to improve the energy efficiency and overall eco friendliness of their property. This can be anything from fitting the house with eco friendly insulation, adding solar panels to the property, changing the way the home is heated etc.
As we have already said, this DOES NOT mean that you won’t have to pay anything on your mortgage. It simply means that whatever extra cash that you borrow from the lender will be interest free for the initial fixed period that you take the loan for. You will still have to pay a monthly loan payment to clear the debt per month, you just won’t be charged interest initially. Here is what Nationwide have specifically said about the loan.
Nationwide Green Mortgage 0% Loan
This is the official statement released by Nationwide on the 15th of May 2023:
We’re pleased to let you know that from 1 June, we’ll be updating our Green Additional Borrowing (further advance) range to offer 0% products for existing Nationwide mortgage members for the first time.
Making the right home improvements could save your clients money on their energy bills and reduce their carbon footprint. But for many, the initial cost can be a hurdle.
That’s where our new 0% mortgage products come in. With no interest to pay for up to five years, they will help make energy efficient home improvements and a greener home more affordable and accessible.
The new Green Additional Borrowing products will offer:
- 2 and 5 year fixed term options
- Loan sizes from £5,000 to £15,000
- Up to 90% LTV
The entire loan must be spent on green home improvements, such as:
- solar panels
- air source heat pump
- window upgrades
- boiler upgrades
- cavity wall insulation
- loft insulation
- an electric car charging point.
There may be exclusions on the use of funds. Members can use any local or national contractor or supplier for the work.
The 0% rate is available for the initial deal period only (two or five years), and will then revert to our Standard Mortgage Rate (currently 7.74%). Only one 0% Green Additional Borrowing mortgage will be available per household, subject to your client meeting eligibility.
So What Could This Look Like?
You will eventually be charged interest on the extra borrowing that you have taken out, but not until your initial 2-year or 5-year fixed rate period has expired, at which point you would either fall onto the SVR rate of 7.74% interest or remortgage to a better rate through your broker. If your loan from the bank is taken out as a maximum of £15,000 and you take it for 10 years, your initial payments on that loan would only be £125 a month, on top of whatever other mortgage you might have.
Once your fixed product period comes to an end, you will either go on to a rate of 7.75% (SVR) which would mean that your payments would go up to £180 a month. Or, you would speak to your mortgage advisor about re-structuring your mortgage so that your entire property finance is on a much more competitive rate (around 4-5% most likely).
Speak To A Mortgage Advisor About Additional Borrowing
If you are wanting to take out some additional borrowing on your current property, whether that is for making your home more eco friendly or not, give our team a call to see how we can help. Our initial mortgage consultations are free of charge.