A Sound Investment

Eco homes could be a good investment. Not only cheaper to run they also attract cheaper and improved lending, as well as potentially increasing the value of your home by up to 14 percent (more in some parts of the south of England).
There seems to be growing recognition that low energy homes should reap the rewards for their energy efficiency efforts by banks and mortgage lenders viewing their lending more favourably, meaning you could potentially borrow more money with an improved interest rate.

The UK Green Building Council (UKGBC) recently reported that under the Mortgage Market Review (MMR) lenders are required access to mortgage affordability based on income and expenses and within this many lenders consider energy costs to some extent.

Currently the average energy cost for a household accounts for 7.2% of the weekly expenditure, above 10% and the household falls into the category of ‘fuel poverty’ (there are estimated to be 10.4% of fuel poor). But eco homes, depending on the extent of ‘eco’, can save up to 85% of space heating costs (which normally represent 80% of your energy bills) with some homes even representing net zero energy, whereby they may be producing more than they use and exporting the unwanted energy.

The Ecology Building Society have already developed a range of mortgage discounts, with varying levels of reward depending on extent of sustainability. Their C-Change Sustainable homes discounts are designed for new and existing energy efficient homes that achieve the Passivhaus or EnerPHit (the slightly relaxed Passivhaus standard for renovated homes) standards. Discounted rates are available ranging from 0.5% to 1.25% (from the Standard Variable Rate) based on a number of energy performance rating schemes currently in the UK. Based on a 25 year mortgage of £100k the difference between Ecology’s standard variable rate mortgage and the C-Change discount of 1.25% could make you a saving of £70 per month, £21,000 over a 25 year mortgage (at todays rate and ignoring the effects of inflation).

What determines the extent to which you can be rewarded are Energy Performance Certificates (EPCs), Code for Sustainable Homes, Passivhaus and EnerPHit which all qualify with a discount, Code Level 6, Passivhaus and EnerPHit achieving the highest possible discount of 1.25%. Those not certified (Passivhaus) or with low levels of performance (4-5 Code for Sustainable Homes) are still potentially able to receive a premium, just a smaller one.

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