Here’s what we think of Barclays Green Home Mortgages – a range of lower rate mortgages for energy efficient, new build homes.
The deal
The Green Home Mortgages from Barclays reward customers who are buying an energy efficient new home directly from a builder or developer with a lower interest rate on certain fixed-rate mortgages. The deals are available whether you are a first time buyer (including an option for those using the Help to Buy scheme) or moving home, as long as you are buying the property to live in.
To be eligible, your new home must have an Energy Performance Certificate (EPC) rating, or Predicted Energy Assessment (PEA), of A or B – you can find out more on this below. The average EPC rating for homes in the UK is D, because older properties generally aren’t very energy efficient. New builds must now by law have energy efficiency measures built in, so most will meet an A or B standard.
As well as the savings you’ll make on your bills from buying an energy efficient home, Barclays estimates that borrowers could save £750 on a £150,000 mortgage over a five-year period (compared to its standard mortgages).
If you are planning to rent out your property, Barclays now also offers a Green Buy-to-Let Mortgage.
User-friendliness
Applying for a green mortgage with Barclays is pretty much the same as applying for a normal mortgage. First, you’ll need to work out how much deposit you can pull together and how much you can afford to borrow. Make sure you check the whole market for the best deal for you – don’t assume that because a green mortgage is cheaper than Barclays’ standard range, that it’s the cheapest out there.
You then apply for an Agreement in Principle. For the Barclays Green Home Mortgage, you’ll need to provide an EPC from your house builder to prove your new home is eligible.
What is an energy-efficiency rating?
Every home must now have an Energy Performance Certificate (EPC) when it is built, sold or rented. This gives the property an energy efficiency rating from A or 100 (most efficient) to G or 0 (least efficient). It is valid for 10 years.
New-build homes will have a Predicted Energy Assessment (PEA) before they are finished. This will give you a predicted energy efficiency rating.
Sustainable investing option
There is nothing inherently sustainable about Barclays Green Home Mortgages themselves. The only thing that is green is the property you are buying as it has a high energy efficiency rating.
Taking out a ‘green mortgage’ does not mean the lender isn’t investing in environmentally-damaging industries. Barclays is, in fact, one of Europe’s worst offenders when it comes to fossil fuel investments, having funded more than £47.5 billion in fossil-fuel bonds since the Paris Climate Accord in 2015.
The bank’s recent climate proposals, which include cutting the overall emissions of its energy portfolio by 15 per cent by 2025 and linking executive pay to meeting climate goals, were met with criticism from environmental groups who say they do not go far enough.
Unique selling points
- Rewarded for going green. Green mortgages increase the appeal of buying an energy efficient home.
The plus points
- Most new build homes eligible. By law, new builds must now be constructed with energy efficiency measures incorporated. Barclays has partnered with all major UK house builders to offer the Green Home Mortgage, meaning that most new build homes will be eligible.
Any drawbacks?
- The mortgage itself is NOT green. The green mortgage is designed to reward you for buying a green home, but don’t be tempted into thinking the mortgage itself is good for the planet. You might feel that Barclays’ record on financing fossil fuel means that choosing its green mortgage would have a negative impact.
- Not necessarily the cheapest on the market. The preferential rates from Barclays means its green mortgage will be cheaper compared to its standard products, but you could probably get a better interest rate from a different lender offering a non-green mortgage.
Cost of use
A two-year fixed rate Green Home Mortgage with Barclays, if you have a 20 per cent deposit, is currently 2.48 per cent with no product fee to pay. If you have a 10 per cent deposit, the rate is 2.60 per cent.
A five-year fixed rate, with a 10 per cent deposit, is 2.75 per cent.
If you are using the government’s Help to Buy scheme, a two-year fixed rate Green Home Mortgage with a 25 per cent deposit is 2.11 per cent. There is also a product fee to pay of £749. A five-year fixed rate with the same deposit is 2.25 per cent.
You can check the latest rates here.
How does this cost compare with competitors?
Ecology Building Society is about as green as it gets when it comes to mortgages. It offers specialist mortgages for sustainable self-build properties and energy efficient renovations. Its standard variable rate is currently 4.65 per cent for self-builds and 4.15 per cent for renovations. All mortgages are funded by members’ savings accounts.
Suffolk Building Society is currently offering a two year fixed rate of 2.45 per cent, with a 20 per cent deposit, or three years fixed at 2.49 per cent. There is no product fee.
Nationwide has a two-year fixed rate mortgage, with a 20 per cent deposit, of 2.79 per cent and no product fee.
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Other options
Other options for a green mortgage include:
