Quick Verdict: Green mortgages offer a lower interest rate, or a cash incentive, on properties with an A or B EPC rating. Most UK homeowners don't currently qualify, but installing a heat pump typically improves an EPC rating, meaning your next remortgage could unlock a better deal. NatWest, HSBC, Barclays, Nationwide, and others all offer green mortgage products in 2026. The savings aren't always dramatic, but they compound over a mortgage term, and they're on top of any installation grants you've already claimed.
What is a green mortgage?
A green mortgage rewards you for owning an energy-efficient home, usually through a lower interest rate or a cashback payment. The incentive is tied to your property's EPC (Energy Performance Certificate) rating, typically requiring an A or B to qualify.
They've grown significantly. In 2019, there were just four green mortgage products available across the UK. By 2024, that number had risen to 61, according to the Green Finance Institute. Most major lenders now have at least one in their range.
From the bank's perspective the logic is simple: energy-efficient homes have lower running costs, owners are less financially stretched, and that reduces lending risk. The rate discount is partly commercial, partly reputational.
How does an EPC rating affect your mortgage?
Your EPC rating runs from G (least efficient) to A (most efficient). Most UK homes currently sit at D, the national average. An A or B rating is genuinely uncommon in the existing housing stock; it's far more common in newer builds.
For most green mortgage products, a rating of A or B is the threshold. Some lenders have started accepting C, though the incentives are usually less generous. When you apply for a mortgage or remortgage, lenders can check your EPC rating on the government's online register. It's public, searchable, and tied to your property address.
EPCs also expire. They're valid for 10 years. If your certificate is old and you've since installed a heat pump, a fresh EPC may show a significantly different rating. Getting a new one commissioned before remortgaging can make a meaningful difference.
Can installing a heat pump improve my EPC rating?
Yes, in most cases. Often substantially. EPC ratings are calculated using a SAP (Standard Assessment Procedure) model that takes into account your heating system type, energy source, and heat loss characteristics. Gas boilers score poorly on this model because of the carbon intensity of the fuel. Heat pumps draw from electricity and operate at high efficiency. As the electricity grid has decarbonised, their SAP score has improved accordingly.
A typical gas-heated home at EPC D or E that installs a well-designed heat pump can move up one or two bands, with some homes reaching B. The exact improvement depends on your property's fabric (insulation, glazing, air tightness), but the heating system itself is one of the largest variables the SAP model responds to.
Most homeowners focus on the BUS grant reducing their upfront cost. The EPC improvement is the slower payback: better remortgage rates that compound for years.
Which lenders offer green mortgages in 2026?
NatWest: reduced rate for EPC A or B
NatWest's green mortgage product offers a lower interest rate on 2-year or 5-year fixed deals for properties with a valid EPC A or B rating. The rate reduction is applied at the point of mortgage offer. You don't need to claim it separately. Maximum LTV is 85%.
NatWest also offer a Retrofit Cashback product for homeowners making qualifying energy improvements, though eligibility conditions apply and it's worth confirming current terms directly.
Visit Natwest Green Mortgages for more info.
HSBC: up to £1,000 cashback for EPC A or B
HSBC's Energy Efficient Homes product offers cashback for customers buying or remortgaging a property with an EPC A or B rating. Cashback amounts reach up to £750 for standard deals and up to £1,000 for certain 5-year fixed deals at higher LTVs. This is a cashback on the mortgage itself, not a rate discount. Worth calculating which gives you more value depending on your borrowing amount.
Visit HSBC Green Mortgages
Barclays: lower rates for energy-efficient properties
Barclays offers a rate discount on mortgage products for properties rated A or B, primarily aimed at new-build purchases direct from a developer. The discount is built into the product rate rather than paid as cashback. Barclays also separately offers the Greener Home Reward (currently £1,000 cashback for improvement works), but that's a distinct product. The green mortgage rate benefit is about the property's existing rating, not the work done to it.
Nationwide: EPC cashback plus green additional borrowing
Nationwide offers two EPC-linked products. New mortgage customers who purchase a property rated A receive a £500 cashback; high-B properties attract £250. The more significant option for heat pump owners: Nationwide allows existing mortgage customers to borrow £5,000 to £20,000 at 0% interest for 2 or 5 years, specifically for green home improvements. Nationwide expanded this commitment in March 2026.
The combination is worth noting: use the 0% borrowing to fund your heat pump, improve your EPC, then access better rates at remortgage.
Nationwide Green Additional Borrowing
Coventry Building Society: green additional borrowing up to £25,000
Coventry BS offers additional borrowing of up to £25,000 for energy-efficiency improvements at competitive fixed rates. At least 50% of the borrowed amount must go towards qualifying green measures. This is interest-bearing (unlike Nationwide's 0% product) but the ceiling is higher, which matters for whole-house retrofit projects.
Visit Coventry Building Society
How much can a green mortgage actually save?
Green mortgage rate discounts are typically in the range of 0.10% to 0.20% below the equivalent standard product. On a £200,000 mortgage, 0.15% saves around £300 per year. Not life-changing, but real, and it compounds across a fixed term.
The broader picture matters more than any single number. The BUS grant reduces installation cost today. A better EPC improves your home's value. The green mortgage rate reduces your borrowing cost at remortgage. Lower energy bills run across the lifetime of the system. No single element carries the whole case for a heat pump. The value comes from all of them together.
The green mortgage rate discount is the long tail of the investment, not the headline.
What to watch out for
Don't compare the green rate in isolation. A green mortgage at 4.1% can be than a standard mortgage at 3.9%, regardless of the green label. Always compare the actual rate against the full market, not just within a lender's own range.
Your EPC must be current and correctly lodged. If your EPC is more than a few years old, commission a new one after your heat pump is installed. An outdated certificate won't reflect your current performance.
Not all heat pump installations move the EPC equally. A poorly designed system (oversized, under-insulated, wrong emitters) may improve the EPC rating but underperform in reality. The EPC model rewards the technology; it can't fully account for how well it's been installed. System design matters.
Green mortgages aren't widely available at high LTVs. Most products require 75–85% LTV or below. If you're in negative equity or close to your limit, you may not qualify.
Product availability changes frequently. The green mortgage market is one of the fastest-moving parts of the mortgage sector. Check directly with lenders, and ideally a whole-of-market mortgage broker, before remortgaging.
Conclusion
Green mortgages are still a relatively niche product, but the market has grown from four products in 2019 to over 60 today. It is still growing. For the majority of UK homeowners currently on gas heating at EPC D, the green mortgage opportunity isn't available yet. Installing a heat pump changes that. An improved EPC reflects a more efficient home and can unlock a lower borrowing cost for years.
At Heat Geek, every installation is designed to perform properly, which means your EPC improvement is built on a system that actually delivers the efficiency it promises, not one that looks good on paper and underperforms in practice.
To see what a heat pump could cost for your home click on the button below.
FAQs
Do I need to have a heat pump already installed before applying for a green mortgage? For most rate-discount products (NatWest, Barclays), yes. The property must already hold an A or B EPC at point of application. For improvement-based cashback products (Saffron, some Nationwide options), the improvement just needs to happen within a defined window.
Will my EPC automatically update after a heat pump is installed? No. You need to commission a new EPC assessment from an accredited assessor. It doesn't happen automatically. Budget around £100–£150 for a domestic EPC assessment.
Can I use a green mortgage alongside the BUS grant? Yes. The BUS grant is applied to your installation cost at the point of installation. A green mortgage operates at the point of purchase or remortgage. They don't conflict.
My home is currently EPC D. Is it worth getting a new EPC after installing a heat pump? Very likely yes, particularly if your mortgage deal is due for renewal. Even a move from D to C can open some product options, and a move to B substantially widens the field.
Do all heat pumps improve your EPC rating? A correctly designed and installed heat pump almost always improves the EPC rating in a gas-heated property. Ground source heat pumps typically deliver a larger improvement than air source, but both move the rating positively. Your installer should be able to give you an indicative estimate before you commit.
This article is for information only and does not constitute financial or mortgage advice. Mortgage product availability, rates, and eligibility criteria change frequently. Always speak to a whole-of-market mortgage broker before making decisions.
