A £4.1m grant has been awarded to lenders to green finance projects that may cut mortgage rates for borrowers, the Department for Energy Security and Net Zero has announced.
The department will help fund 26 home energy efficiency pilot projects by unlocking upfront cash that allows homeowners to make green upgrades, such as installing loft insulation and double glazing, that could save up to £460 a year on energy bills.
It adds: “Homeowners who make their properties more energy efficient could see their mortgage rate cut.”
As part of the scheme, Aviva Equity Release UK will receive £87,612 to design a service that allows homeowners to access equity in their property through a specialist lifetime mortgage, freeing up cash to improve the energy efficiency of their homes.
The firm adds it will share the results of its pilot “with the wider industry to support industry-level change”
Another trial will see Perenna Bank will receive more than £193,000 in government funding to help develop long-term, fixed-rate home loans that will incentivise customers to make their homes more energy efficient by offering to reduce their mortgage rate.
And Ashman Bank Limited will be awarded £200,000 to allow buy-to-let landlords to add the cost of making properties more energy efficient onto their mortgage – enabling them to borrow the money for the improvements and include it in their monthly repayments.
The department says these projects are part of the government’s £20m Green Home Finance Accelerator, which is funded through the £1bn Net Zero Innovation Portfolio.
It adds that this, “funding will help drive wider government efforts to ensure as many homes as possible reach an energy Performance Certificate band C by 2035, with higher ratings likely to result in lower fuel bills.”
Other bodies such as Clydesdale Bank, E.ON Energy Solutions and Leeds City Council will also run projects in the scheme.
Minister for Energy Efficiency and Green Finance Lord Callanan says: “The government has put in place long-term commitments to ensure homes across the country have greater energy efficiency to reduce bills, drive down energy use and lower emissions.
“We are supporting these organisations to develop fresh and innovative ways of helping more people get better access to energy efficiency measures, such as loft insulation, double glazing and heat pumps.”
Aviva head of equity release pricing Scott Brown adds: “Aviva and the Department for Energy Security and Net Zero will co-fund our customer research to explore the development, which will aim to 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.”
