The new product will enhance the lender’s green mortgage range for renovations and whole-house retrofit aimed at driving energy efficiency of existing homes to meet the UK’s net-zero carbon goal.

Its new variable rate Renovation product has an initial rate of 3.65% while the renovation works are underway.

However, on completion of the works borrowers will be eligible for a discount of 0.25% for every energy rating step improvement based on the (EPC) Energy Performance Certificate of the property (up to maximum discount of 1.50%).

Incentive

This retrofit version of Ecology’s range of C-Change discounts is designed to incentivise and encourage borrowers to upgrade their homes to a better energy efficiency rating.

For example, if a property is improved by four EPC steps from EPC F to EPC B, a discount of 1% applies resulting in a variable rate of 2.65% for the remaining term of the mortgage.

An application fee of £600 is payable.  Applicants can borrow up to 90% of the property’s value on a repayment basis (75% interest-only or part repayment and part interest only).

What’s more, for homes renovated to the exacting Passivhaus EnerPHit standard, an enhanced discount of 1.25% is applicable on completion of the works with a resulting variable rate of 2.40% for the remaining term of the mortgage.

Ecology explained its decision to introduce the new Renovation mortgage came as the government was recognising the urgent need to retrofit the UK’s existing homes just after the launch of the Green Homes Grant Scheme, to improve energy efficiency of homes.

The building society said it welcomed projects which standard lenders may not accept including where the property is deemed not to be habitable or fallen into disrepair.

Ecology offers flexible staged payments based on the needs of the borrower and will consider lending on homes in any condition, as long as the works required improve the energy efficiency of the property.  The Renovation Mortgage is also available where a property is being purchased for renovation.

Build back better

Daniel Capstick, Ecology’s mortgage manager said: “Now more than ever it’s important that lenders play an active role in a sustainable recovery, helping to build back better.

“We’ve been leading the way on green mortgages for nearly 40 years and we hope that our new Renovation mortgage will incentivise more people to consider retrofitting their home, which will be critical in the fight against climate change.” 

Meanwhile, Russell Smith, MD of Retrofit Works a not-for-profit co-operative which was established to design, manage and deliver energy efficiency and environmentally-friendly retrofit schemes for homes, said: “The sheer scale of the retrofit task is huge requiring one home every 35 seconds between 2020 and 2050.

“Ecology has been a long-standing provider of mortgages for whole house retrofit and, given the desperate need for innovative finance, it’s good to see them renewing their focus on supporting renovations.

“We’d like to see other lenders joining Ecology, as part of a government led-National Retrofit Programme, to ensure that finance isn’t a barrier to improving the energy of our homes.”