In a world where we are all encouraged to be more environmentally friendly, we are constantly looking at ways of reducing our carbon footprint and preserve the world for future generations. One of the major ways that people are looking at doing this, is by making improvements to their properties to comply with energy efficiency regulations. There are already lots of developers building eco-homes and a lot of lenders offering green residential mortgages. But what about rental properties and landlords? Could there be a market for a green buy-to-let mortgage?
What Is A Green Mortgage?
We have covered this in several articles previously so we won’t go into too much detail but a green mortgage is essentially a mortgage product that is offered by lenders to encourage developers, home owners, and potential buyers to make their properties more eco friendly. Purpose built eco-homes and properties that have made necessary improvements meaning that they are now more energy efficient can benefit from discounted mortgage rates and other benefits with a specific ‘green mortgage’.
For many people, this could mean that your mortgage payments literally decrease by hundreds of pounds a month because the interest rates are often lower than standard fixed or variable loans. As well as saving you money, you are also saving the planet by making the conscious effort to reduce your property’s carbon footprint. In most lender’s cases, green mortgages have been successful and popular with borrowers, however most products are only for residential properties.
Making Home Improvements To Boost EPC Rating?
Several news sources have reported in recent weeks that landlords are being increasingly encouraged to consider changing their mortgage to a green buy-to-let mortgage or taking out bridging finance to make their property portfolio more eco-friendly, EPC compliant, and to save them money! Ryan Fowler for The Intermediary reported that many mortgage brokers are encouraging their landlord clients to look at bridging options in the short term so that they can make necessary improvements to their properties.
Bridging finance is a short term mortgage loan that can provide a burst of cash to ‘bridge the gap’ in house finance. It seems that advisors are encouraging landlords to take out short term bridging loans to do things like add double glazing to properties, add new eco-friendly insulation, add solar panels, and other green property improvements to bring their properties up to EPC standards.
An EPC rating is a rating that a property is given that shows the energy efficiency level that the home has. A lot of lenders won’t lend on properties that have a low energy efficiency rating, so now more landlords are looking to make such improvements. A bridging loan means that a a landlord could inject some much needed cash into their properties to bring them up to standard and then look at another mortgage option in the future.
Green Buy-To-Let Mortgage
Another option that is being rolled out by an increasing number of lenders is the green buy-to-let mortgage. Like a regular green mortgage, a green buy-to-let would be offered by a lender on properties deemed as green properties or eco-friendly properties and will often be on discounted rates and/or offer incentives not available with standard buy-to-let mortgages.
High-street lenders such as Barclays currently offer very competitive green rental property mortgages. Here is a breakdown of what Barclays and other lenders currently offer:
- 5.16% Barclays Green Home BTL 5 Year Fixed. £1295 product fee. 7.3% APRC. 8.49% variable for the remaining term once the fixed period ends. 75% LTV Maximum (Minimum loan £35,000, Maximum loan £1,000,000)
- 5.51% Barclays Green Home BTL 2 Year Fixed. £1295 product fee. 8.2% APRC. 8.49% variable for the remaining term once the fixed period ends. 75% LTV Maximum (Minimum loan £35,000, Maximum loan £1,000,000)
- 8.24% Foundation Home Loans 5 Year Fixed Green BTL. Maximum 75%Max loan £1.5m
- 5.04% Bank of Ireland BTL Green Mortgage 2 year fixed. £1995 product fee. 6.6% APRC. 6.59% variable rate for the remaining term once the fixed period ends. 75% LTB Maximum.
If you are a portfolio landlord looking to make some eco-friendly improvements to your property and are looking into your green mortgage options, give our expert buy-to-let mortgage brokers a call today. We’re here to help.