Green Mortgages

A green mortgage (sometimes referred to as an ethical or ecological mortgage) is a specialised type of interest-only or repayment mortgage which aims to help protect the environment. There are three main ways this is achieved: some lenders will donate money to an ecological charity on your behalf, or contribute to a reforestation project, whilst other lenders exclusively offer their green mortgages to energy-efficient properties or environmentally-friendly businesses. In addition, most 'green' mortgage providers will not lend to businesses that harm the environment.

Green mortgages can also be used to finance a self-build property which is designed to be energy-efficient when it is finished, or uses 'green' building materials, such as recycled or reusable content, and resource-efficient materials. If you opt for a green mortgage, you may find your new, energy efficient home helps reduce the cost of your mortgage repayments.

Currently, there are only a few lenders who offer green mortgages. However, as society becomes ever more aware of environmental issues, more and more mortgage providers are expected to begin offering this type of mortgage, especially given the UK government's financial support for green housing. If you wish to get the best deal from a green mortgage lender, you may decide to find a specialist broker to help you. Although you will usually have to pay a small fee for their services, they may be able to arrange a mortgage deal that was otherwise unavailable to you.

In some cases, you may find that a green mortgage is more expensive, but equally, if you would usually donate to environmental protection charities separately, you may find that this type of mortgage offers you a good deal. As with any other type of mortgage, you need to compare the interest rates, the mortgage term and fees that apply to ensure that you get a good deal. Depending on your situation, the lender and mortgage deal you choose, you may find that a green mortgage cannot offer you the best deal and your environmental conscience is best employed in another way, such as investing part of your savings in a reforestation project.