Green Mortgages: What Are They?

One of the benefits that a Summerfields home can provide is that it helps you qualify for a “Green Mortgage”. Potential Irish homebuyers can now save money on their mortgage as well as their electricity bills if they choose a sustainable, energy-efficient home.

Firstly,

What is a Green Mortgage?

A green mortgage is a sustainable alternative to the regular long-term mortgage applied for by homebuyers. To put it simply a green mortgage is where the cost of the borrowing is directly linked to the energy performance of the new building. The idea of this mortgage is that the money the borrower saves by having a more energy-efficient home should help them be more competent in making their mortgage repayments.

Under a green mortgage, a mortgage lender or bank offers the potential homebuyer preferential terms if they can outline that the property that they are borrowing for can meet certain environmental standards. This could be with a newly built home with an existing sustainability rating/BER rating. A green mortgage is specifically targeted at green buildings.

As an added incentive to buy a green building, the bank would offer either a lower interest rate or an increased loan amount.

What is a BER Rating?

A BER is an energy label that comes with an accompanying advisory report for homes. The rating is based on a simple A to G scale with A-rated homes being the most energy-efficient.  The Sustainable Energy Authority of Ireland (SEAI) estimates that improving a 3-bed semi-detached house from a D-rating on the BER scale to an A would help to reduce your property’s annual energy bills by around €1,500.

A Green Mortgage will be available to you at a fixed interest rate if you are purchasing a property that has a BER rating of B3 or better. New Summerfields homes will be 70% more energy-efficient and emit 70% less carbon dioxide than previous 2005 performance levels. An A-rated 3-bedroom semi-detached house on the BER scale will be on average €800 cheaper than similar houses built-in 2005.

Why are Lenders/Banks interested in a Green Mortgage?

The definition of green needs to be matched with the overall business scale for lenders to offer green mortgages.  These green mortgages for banks are about reducing risk. There is growing proof that suggests Green Buildings (and its occupants) represent a better option for banks because:

• Green Buildings should reduce running costs due to decreased utility bills, meaning the borrower would be in a better financial position to repay their loan, thereby reducing the bank’s overall investment risk.

• Green Buildings are thought to have an increased value which is known as ‘green value’. The importance of green value is expected to increase over time. Maximising green value is a benefit for the lender who wants to reduce the risk of their loan.

Irish financial institutions do recognise the game-changing role that they can play in profitably supporting the national transition to a low carbon, resource-efficient, and circular economy. As part of a broader sustainable lending strategy, several banks in the Irish market have already introduced discounted green mortgage services.

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