Green mortgages can “hugely support” first-time buyers by offering financial incentives to keep costs down, according to Alex Dowling, head of sales and marketing at David Wilson Southern Counties.
Dowling’s comments come in response to a recent case study of a couple who were able to afford their first home due to a green mortgage.
Georgia and Molly, without the use of schemes or family help, managed to put down a 10 per cent deposit of £41,500 to secure their first home in Ecclesden Park.
“We started off on a high interest mortgage rate of 5.15 per cent but after finding out that we could change our rate up until the day we move in, we secured a much lower rate of 4.55 per cent,” Georgia stated.
“Applying for a green mortgage definitely benefited us financially, with a better overall rate, and with our reduction in energy bills, a new home was the best way forward for us.”
The couple added that buying off plan meant they were able personalise their home, including upgrading the bathroom and tiling before moving in.
Speaking on this case, Orchard Financial Advisers managing director, Ben Perks, said: “Buying an energy-efficient property doesn’t just save the planet, it could save you some pennies too.
“There are a growing number of lenders that are offering preferential interest rates for ‘green’ homes.”
However, Perks cautioned that an energy-efficient property can “often cost more” than a normal home, and the increased price tag can deter first-time buyers.
“While better deals are available, this isn’t something that many first-time buyers are able to take advantage of,” he added.
However, other advisers cast doubt on the effectiveness of green mortgages, arguing they do not offer as many real world benefits as expected.
One such adviser was Albion Financial Advice director, Darius Karpowicz who, while acknowledging it was “great” Georgia and Molly were able to secure a better rate, cautioned that green mortgage incentives “often feel more of a marketing gimmick”.
He explained that, for most first-time buyers, meeting the criteria for a green mortgage is a “bonus rather than a primary motivation” as, while these incentives can help keep costs down, “they aren’t usually the deciding factor in purchasing a home”.
Karpowicz concluded: “From my experience, while green mortgages can be beneficial, they aren’t the main attraction for first-time buyers.
“People generally prioritise location, price, and size over energy efficiency, and if they meet the criteria for a green mortgage, it’s just an added benefit.”
A similar sentiment was shared by Yellow Brick Mortgages managing director, Stephen Perkins, who said that green mortgages offer “very little saving or benefit” to borrowers in their current guise.
“I am yet to find anyone who purposefully selects their dream home based on green mortgage criteria,” Perkins added.
tom.dunstan@ft.com
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