Financing

What a Green Mortgage Is and How to Get One

The benefits of buying an environmentally sustainable home are well known: saving money and energy, less environmental impact and more. What not everyone knows is that some banks will lower the interest rate if you finance the purchase with a green mortgage. The comparison site HelpMyCash explains exactly what this product is, which lenders offer it and what you need to get one.

For buying and renovating sustainable homes

A green or eco mortgage is basically a loan that lets you finance the purchase or renovation of a sustainable home on better terms. As a rule, the interest rate is lower than what the bank charges for conventional properties, and in some cases there are other advantages too, such as a higher loan-to-value.

That said, few banks currently sell a green mortgage that is cheaper than a conventional one. According to HelpMyCash, the only ones that openly do so are Hipotecas.com, Banco Santander, Cajamar, Triodos Bank and Banco Mediolanum (all in Spain). Even so, it is possible to negotiate with any lender to try to get those improved terms.

You must present an energy rating certificate

Naturally, the bank granting a green mortgage needs proof that the home is sustainable. To do so, you will need to present the property’s energy rating certificate, which must be A+, A or B depending on the lender’s requirements.

You will also need to meet the usual solvency requirements, or the bank will not approve the loan: enough savings (usually around 30% of the home’s value), a good income, job stability and a clean credit history.

They are not always better than conventional mortgages

HelpMyCash warns that green mortgages do not always offer better terms than conventional ones. Despite their reduced rates, some banks offer loans with even more attractive rates for non-sustainable homes, at least on paper.

That is why the best approach is to go to several lenders, both those that offer green mortgages and those that do not, and ask about their financing terms. That makes it much easier to compare offers and choose the one that works best for you. When you do, look beyond the interest rate to other important factors such as the products required for the maximum discount, and fees.

This article was originally published in Spanish. Read the original.