Kensington has launched a “green mortgage” which pays £1,000 cashback to borrowers who make energy efficiency improvements. 

In order to qualify for cashback through Kensington’s eKo mortgage, customers must improve their home’s energy efficiency rating by 10 points based on the standard scoring system used by assessors.

The changes must be made within the first year of completion. 

An improvement of 10 points is equivalent to insulating a hot water cylinder, switching to low energy lighting, installing solar panels or insulating the loft, according to the lender.

Rates start from 3.04 per cent at 75 per cent loan-to-value, with free valuation and fee legals on remortgages.

Kensington chief executive Mark Arnold says: “Many people are becoming increasingly conscious of their carbon footprint and want to reduce it. 

“So making energy efficiency improvements in your home is a no-brainer – you can help combat climate change and save on your bills at the same time.

“With Kensington’s new eKo mortgage you can also be rewarded in the form of cashback. 

“We are particularly excited about this new product because unlike other green initiatives, the eKo Cashback Mortgage is targeted at efficiency improvements to pre-existing properties, rather than focusing on investment in new builds, offering the opportunity to help combat climate change to a much broader set of borrowers.”

Legal & General Mortgage Club director Kevin Roberts adds: “Like all industries, the housing and mortgage markets must react to the threat of climate change and the importance of reducing carbon emissions.

“Renovating existing housing stock is a crucial part of this mission and that means incentivising consumers who want to improve the energy efficiency of older homes.”