Expert guidance essential as sustainable lending options expand
As green mortgages become a more prominent feature of the UK housing market, brokers are playing an increasingly vital role in helping clients navigate the complexities of these products.
With lenders offering a growing range of incentives for energy-efficient properties, advisers are tasked with ensuring borrowers understand both the benefits and the eligibility requirements.
Mortgage expert David Hollingworth (pictured top) highlighted the importance of broker expertise in this evolving market. “First and foremost, brokers will have a better appreciation of the rates that could be available,” he said. “Getting the best deal for a customer is part of an adviser’s DNA, so asking the right questions to help understand the potential will be a big part of that.”
As the market develops and more options for retrofitting and improving energy efficiency become available, the broker’s role is set to expand further. “Financing those improvements will be important as more homeowners look to improve their homes and reduce their carbon footprint,” Hollingworth said. “Advisers will play a big part in making those changes a reality.”
He noted that green mortgages typically reward borrowers with more energy-efficient homes through lower interest rates, reduced fees or enhanced cashback. “There’s more support from lenders for those that want to improve their property and make it more energy efficient,” he said. “The expansion of the number of available green products will help to highlight the benefits of energy efficiency. Homeowner awareness has also grown through a desire to be ‘greener’ but also because of the rising cost of energy.”
However, Hollingworth, who is the associate director at fee-free mortgage broker L&C Mortgages, observed that a lot of borrowers are still unaware of the potential advantages. “There will still be many that aren’t entirely aware that they could have better rates available to them through owning a more efficient property,” he said. “Many of the deals will be based on the EPC rating of the property and some properties won’t have a valid EPC.”
While Hollingworth welcomed the growth of green mortgage products, he acknowledged that the market still has some way to go. “Although it’s easy to say that the market needs to go further in making energy efficiency front and centre, at least the deals are offering better value, even if in many cases, it will largely be new build homes that qualify,” he said. “It will bring greater awareness to consumers and further underline the benefits of a more energy efficient home, whether that’s through a lower rate or a slightly higher borrowing level.”
For those considering a green mortgage for the first time, Hollingworth advised caution. “Don’t assume that a green mortgage will always be the right choice,” he said. “An adviser will help you take stock of the right deal for your circumstances, but make sure that you understand the efficiency rating which will generally be crucial to product availability.”
He also warned: “It’s easy to refer to green mortgages as a generic term but the eligibility criteria for each lender can vary, which is where customers will find it harder to understand what could work for them.”
Hollingworth also recommended that borrowers planning to improve their property’s energy efficiency should inform their adviser, as this could influence the choice of lender. “Those that are looking to improve the efficiency of their property should undertake some research, and more lenders are offering tools to aid that process,” he pointed out. “It also makes sense to flag future plans to the adviser as it could make a lender with a strong retrofit proposition more attractive.”
As green mortgages continue to evolve, the expertise of brokers will remain central to ensuring borrowers are fully informed and able to access the most suitable products. With regulatory changes and lender offerings set to develop further, advisers are expected to play an ongoing role in supporting clients through the complexities of the market and helping them realise the benefits of energy-efficient homeownership.
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