★ Key Takeaways
- Green mortgages offer lower interest rates or cashback for homes with an EPC rating of A or B – saving you money from day one
- Rate discounts typically range from 0.05% to 0.30%, while cashback offers can be £250 to £1,000
- EPC A/B rated homes sell for 10.9% more on average, making energy efficiency a smart investment for property value
- Scotland's EPC reforms take effect October 2026, with landlords likely required to meet EPC C minimum by 2028
- Home Energy Scotland offers grants and interest-free loans to help fund energy efficiency improvements
Introduction
Green mortgages are one of the mortgage market's best-kept secrets. If you're buying an energy-efficient home – or planning to make your current home more efficient – you could access lower interest rates, cashback incentives, and even interest-free loans for improvements.
With energy costs remaining high and Scotland's EPC regulations tightening, the financial case for green homes has never been stronger. An energy-efficient home doesn't just save you money on bills – it can also save you money on your mortgage, increase your property's value, and future-proof your investment.
In this guide, I'll explain exactly what green mortgages are, which lenders offer them, how much you could save, and why Scotland's upcoming EPC reforms make this topic increasingly important for every homeowner and buyer.
What Are Green Mortgages?
Green mortgages are specialist mortgage products that reward borrowers who buy or own energy-efficient properties. The incentives typically come in two forms:
- Lower interest rates – A discount of 0.05% to 0.30% off the standard rate for properties with an EPC rating of A or B
- Cashback – A lump sum payment upon completion, typically £250 to £1,000, for buying an energy-efficient property
The logic behind green mortgages is simple: energy-efficient homes cost less to run, so homeowners have more disposable income available for mortgage payments. This lower risk for lenders translates into better deals for borrowers.
Which Lenders Offer Green Mortgages?
The green mortgage market is growing rapidly. Here's a summary of what the major lenders currently offer:
| Lender | Incentive Type | EPC Required | Key Details |
|---|---|---|---|
| RBS | Lower rates | A or B | Available across residential range |
| NatWest | Lower rates | A or B | Max 75% LTV |
| Halifax | £250 cashback | A or B | On top of standard products |
| HSBC | £500-£1,000 cashback | A or B | Amount varies by product |
| Barclays | Lower rates | A or B | Green Home Plan range |
| Nationwide | £250-£500 cashback + improvement loans | A or B (cashback); any (loans) | £5k-£20k interest-free for improvements |
| Coventry BS | Lower rates | A, B, or C (BTL) | Includes EPC C for buy-to-let |
Note: Products and rates change frequently. These are indicative of current offerings as of early 2026. A broker can provide the latest up-to-date options.
The Financial Case for Energy Efficiency
Beyond mortgage savings, energy-efficient homes deliver financial benefits across multiple fronts. Understanding what drives property values in Scotland shows why energy efficiency is increasingly important.
Higher Property Values
Research shows that homes with an EPC rating of A or B sell for 10.9% more on average than comparable less efficient properties. Improving a property from EPC E to C can add approximately 8% to its value. As energy efficiency becomes more important to buyers – and regulations tighten – this premium is likely to grow.
Lower Energy Bills
An EPC A-rated home can save over £1,500 per year on energy bills compared to an EPC D or E property. Combined with a green mortgage rate discount, the total savings can be substantial – potentially £2,000+ annually when you add mortgage savings to energy savings.
Future-Proofing Your Investment
With EPC regulations tightening across the UK – and Scotland leading the way – investing in energy efficiency now protects your property's value and saleability in the future. Properties with poor EPC ratings may become harder to sell or mortgage as standards rise. This is especially relevant if you're considering how much you can borrow – a more efficient home could unlock better terms.
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Book Your Free ConsultationScotland's EPC Reforms: What's Coming
Scotland is pushing ahead with ambitious energy efficiency targets that will affect both homeowners and landlords:
- October 2026: Scotland's new EPC assessment methodology takes effect, potentially changing ratings for many properties
- By 2028 (expected): Landlords in Scotland will likely need to achieve a minimum EPC rating of C for rented properties
- Long-term target: The Scottish Government aims for all homes to reach EPC C by 2033 where technically feasible
For landlords, these changes are particularly significant. If your rental property currently sits at EPC D or below, you'll need to invest in improvements or risk being unable to legally let the property. Acting now gives you time to plan improvements and access funding while avoiding last-minute rush costs.
Funding Energy Efficiency Improvements
Upgrading your home's energy efficiency doesn't have to break the bank. The cost of improving from EPC D to C typically ranges from £3,653 to £15,000, depending on the property and the improvements needed. Here's how to fund it:
Home Energy Scotland Grants and Loans
Home Energy Scotland offers free, impartial advice and access to funding for energy efficiency improvements. Depending on your circumstances, you could access grants and interest-free loans up to £7,500 for measures like insulation, heat pumps, and renewable energy systems.
Nationwide's Green Additional Borrowing
Nationwide offers £5,000 to £20,000 in interest-free borrowing specifically for energy efficiency improvements. This can cover insulation, double glazing, solar panels, heat pumps, and more. It's one of the most generous green lending products on the market.
Remortgaging to Release Equity
If your property has increased in value, you could remortgage to release equity for energy improvements. This can make particular sense if you can then qualify for a green mortgage rate – effectively using your home's equity to fund improvements that save you money on both energy bills and mortgage payments. For first-time buyers, choosing an energy-efficient property from the outset can mean accessing better rates immediately.
Frequently Asked Questions
What EPC rating do I need for a green mortgage?
Most green mortgage products require an EPC rating of A or B. However, some lenders – like Coventry Building Society for buy-to-let – extend their green products to EPC C properties. Nationwide's interest-free improvement loans are available regardless of your current EPC rating, as the aim is to help you improve it.
How much can I save with a green mortgage?
The savings depend on the lender and product. A 0.10% rate discount on a £200,000 mortgage saves about £12/month or £144/year. A 0.30% discount saves about £36/month or £432/year. Add cashback of £250-£1,000, lower energy bills, and the property value premium, and the total financial benefit can be several thousand pounds over the mortgage term.
Can I get a green mortgage on an older Scottish property?
Older Scottish properties (especially stone-built tenement flats and Victorian houses) typically have lower EPC ratings. To qualify for a green mortgage, you'd need to improve the property to EPC A or B, which can be challenging and expensive with older construction types. However, even partial improvements can qualify you for green improvement loans, and bringing a property up to EPC C may qualify for certain products. It's worth checking what improvements would be most cost-effective for your specific property type.
Are green mortgages available for buy-to-let properties?
Yes, and they're becoming increasingly relevant for landlords as EPC regulations tighten. Coventry Building Society stands out by offering green BTL rates for properties rated EPC C or above – a more achievable target than A/B. Given that Scottish landlords will likely need EPC C minimum by 2028, investing in energy improvements now and accessing green BTL rates makes strong financial sense.
How do I check my property's EPC rating?
You can check your property's EPC rating for free on the Scottish EPC Register (scottishepcregister.org.uk). Just enter your postcode and find your property. The report will show your current rating, potential rating after improvements, and specific recommendations for improving your home's energy efficiency.
Make Your Home Work Harder for You
Green mortgages represent a genuine win-win: lower mortgage costs, reduced energy bills, higher property values, and a smaller carbon footprint. Whether you're buying a new-build with a high EPC rating, improving your current home, or investing in buy-to-let, there are products designed to reward your commitment to energy efficiency.
At McGhie Mortgages, I help homeowners across Edinburgh, the Lothians, and all of Scotland access the best green mortgage deals on the market. I'll check if your property qualifies, compare products across all lenders, and make sure you're taking advantage of every available incentive.
Want to see if you qualify for a green mortgage? Book a free, no-obligation consultation and let's find the greenest deal for your home.