Homeowners will be offered a reduction in their mortgage rate in exchange for creating energy-efficient homes
A total of 26 green finance projects will receive government funding, making it easier to create more energy-efficient homes. Mortgages that reward energy efficiency upgrades and loans linked to installing heat pumps will be part of the scheme.
Ashman Bank Limited and Perenna Bank will receive a grant of close to £200,000 to design comprehensive energy solutions. The solutions will evaluate energy-efficent homes , offer recommendations for improvement, and integrate any expenses into the mortgage term.
The project will provide relief during the cost-of-living crisis
Supported by £4.1m of government funding, the projects comprise many green finance products. Measures like loft insulation and double glazing will help homeowners save over £460 per year on their energy bills, providing financial relief for families nationwide.
Products such Termex Cellulose blown-in thermal insulation can help homes become more energy efficient. This insulation has a low thermal conductivity of just 0.038 W/mK, offering remarkable energy efficiency. It’s easy application and strong airtightness contribute to significant savings, up to 30%, on heating costs when used for loft insulation alone.
In another trial, buy-to-let landlords can combine any expenses associated with improving the energy efficiency of their properties into their mortgages. This will allow them to borrow the funds for the improvements and include them in their monthly repayment schedule.
“Aviva is delighted to have secured funding from the government to explore building a green mortgage solution for later life lending. Aviva and the Department for Energy Security and Net Zero will co-fund our customer research to explore the development,” said Scott Brown, head of equity release pricing at Aviva.
“This will enable later life households to make home energy efficiency improvements, making their homes more comfortable to live in, reducing energy bills and helping drive a reduction in the carbon footprint of the UK’s housing stock,” he continued.
The government has optimistic targets for energy-efficient homes
After a six-month Discovery Phase, all 26 projects within the Green Home Finance Accelerator will be able to seek larger grant awards ranging from £200,000 to £2m. These grants will facilitate the pilot testing their green finance products and services.
The investments are part of the £20 million Green Home Finance Accelerator, which receives funding from the £1bn Net Zero Innovation Portfolio. The funds will be vital in supporting the government’s broader initiatives to ensure more energy-efficient homes.
The government aims for all new homes to achieve an Energy Performance Certificate (EPC) rating of band C by 2035. Higher EPC ratings will lead to reduced fuel expenses for homeowners.
