What exactly is it that makes a banking product green? Surely, the big bad banks aren’t actually trying to do something good for the environment, are they? We understand your suspicion. They’re certainly up to something, but is that something good both for you, your pocket, and the environment? 

These are the questions we’re hoping to answer with today’s article, an in depth look into the UK’s green banking services and green mortgages. The who, when, what, where and what have you’s of the new and hopefully expanding set of green services that banks are are offering. Is it all simply too good to be true?  

We’re going to let you in on a secret. Green banking and green mortgages are great. They’re equally beneficial for both your pocket and the environment, as long as they’re the real deal. Dirty banks have a tendency to wrap their products in shiny, non-biodegradable sulphurous green wrapping in hopes of tricking their customers into believing they’re sustainable.  

It’s our job to help you see past the pictures of smiling cyclists, solar panels and wind turbines, and cut straight to the heart of the matter. 

What is a green bank product? 

First of all, we want to point out loudly and clearly that green banking products are a great thing. If you care about the environment as much as you might about saving money, then this could be a goldmine.  

Green banking consists of your usual bank offerings, such as mortgages, but with a ‘green’ or ‘sustainable’ twist. For instance, you might receive a better interest rate on a loan to build a heat pump than you might otherwise. Home renovation loans to raise the energy rating of your house with insulation and better windows, build solar panels or even for electric transport might offer more flexible terms than otherwise. Basically, green banking products incentivise you to build or buy sustainably in return for a better deal. 

As of now, not every bank offers these services. That’s why we wholeheartedly encourage you to write letters, call and pester your bank until they do. Or you can simply switch to a better, greener bank that already offers these services, and probably does it better. 

Who is offering these products? 

Green banking services can be diverse, and different banks often offer different terms, services and items altogether. Some of the biggest banks (and polluters) do offer vaguely green products, but we’re going to ignore them out of spite, just like you should. 

If you’re banking with a smaller, local enterprise then it’s probably worth enquiring in person just in case they’re willing to offer a more personalised deal than a bigger, corporate entity might. 

Nationwide Building Society 

Nationwide Building Society is a great bank.  And being a great bank, they offer cashback on mortgages when buying homes with an Energy Performance Certificate (EPC) of 86 and up. Mortgage holders who reach these lofty heights can look forward to a cashback of up to £500. 

Now, we know that £500 isn’t much in the great scheme of things, not when you’re considering a mortgage of a few hundred thousand. But £500 is £500, and we’ve spent enough time looking behind the cushions to know we take what we can get. Especially when it’s a step in the right direction for the environment. 

As well as that, Nationwide offers a 0% interest rate on home energy improvement loans for the first two to five years. There are terms with every loan, of course, so 100% of the money must be used for energy improvements. These loans can range up to £15,000, which would certainly make a dent in a huge range of improvements. 

Perenna Bank 

Perenna Bank is bright and shiny and very new. They’re offering green mortgages with lower interest rates. They are also developing retrofit loans with lower rates that reward you for going green – keep an eye out for the launch. In addition, they offer a “Zero Bills mortgage” if you are buying a Zero Bills home, an eco-friendly house that has no energy payments for the first five years. 

It’s a very interesting concept and seems to have been very successful, with a large uptake across the UK. It’s certainly worth taking an extra look at. 

Virgin Money 

Virgin Money goes the traditional route of offering cashback, up to £250 on borrowings of £2,500 when spent on energy efficient home improvements. They’re also offering lower interest rates on mortgages when spent on homes with an energy rating of A or B. You’re more than welcome to overpay by up to 10% of the value each year, which can save you thousands upon thousands of pounds throughout the lifetime of the mortgage. 

As always, they’ve taken the low hanging, but useful, fruit of having an advice section on their website, offering lots of tips on home energy improvements and saving money. Better than all of that, they’re rated as a ‘Great’ bank on our website, so you know you can trust them. 

Natwest 

Natwest offers green mortgages with a reduced rate when buying or repurchasing a house with an EPC rating of A or B. We can’t tell you exactly what a ‘reduced’ rate looks like as it all depends on your own personal circumstances, but we do encourage you to take a look and find out. These rates only apply on two- or five-year fixed rate mortgages. You’ll see in our bank ratings that Natwest needs to do better when it comes to funding the fossil fuel industry. We’re taking the appearance of green services as a good sign, and an actual willingness to improve. 

On their website, they also provide several services which you can use to see how you might improve the energy rating of your home. Ideas like Home Energy Saving Tips and the Green plan might not reduce your mortgage, but they do help to get you thinking about a more efficient home. All of these advice and tip sections are free to use on the Natwest website, so you don’t even have to worry about being the customer. 

Let’s not forget their Green Loans for Business either, aimed at helping businesses purchase solar panels, electric vehicles and other sources of renewable energy. Their Home Energy Efficiency Tool helps you plan your sustainable home improvements, so you’ll even know exactly what to spend your loan on. Helpful, that. 

Coventry Building Society 

Coventry Building Society offers ‘Green Additional Borrowing’, which offers a little twist on green borrowing. You can borrow up to £25,000, and as long as you at least 50% of the loan on energy efficiency projects, such as the aforementioned heat pump, you get a reduced interest rate. 

The catch being that your rate switches back to the standard after your initial rate period. Their Home Energy Efficiency Tool helps you plan your sustainable home improvements, so you’ll even know exactly what to spend your loan on. Helpful, that.  

It’s worth mentioning that if you’re interested in taking a loan or a mortgage with Coventry Building Society that they’ve been voted The Times Money Mentor Awards 2023 for Best Mortgage and have a gold ribbon from Fairer Finance for customer experience in relation to their mortgages in 2024.   

How can we do this even better? 

For the moment, the vast majority of green banking products and schemes focus on offering cashback for more efficient homes and reduced mortgage rates for the same. This, we admit, is pretty unimaginative even for the most die-hard ‘fossil fuels are life’ bank. The above examples are great, and probably the most useful for the average customer like you or me. Quick, easy savings when we choose to go green, not to mention the reduced cost of electricity and heating when we add things like heat pumps to our homes. 

They’re simply better, just like green loans. But what if there was more? What if we were to get a little bit more creative with our green banking ideas? With the increasingly quick transition to renewable energy, the banking sector will eventually (We hope) catch up and start offering more and more services under the ‘Green banking’ umbrella. 

Let’s take a look at the future, using one of the most radically green banks out there, to see what mainstream products might be available in the future. 

The Future of Green Services with the Ecology Building Society 

The Ecology Building Society is one of the foremost, if not the, leading provider of green loans, mortgages and other banking services.. After a quick look at their website and offers it’s quite easy to see what the future might have in store for us. They’ve embarked on a sort of green banking bonanza which we wholeheartedly support in every imaginable way. 

Here’s a roundup of just some of their services: 

The C-Change Mortgage 

This is our standard green mortgage with a not so standard discount. Customers, provided they meet the T&Cs of course, can avail of a 0.25% to a 1.50% discount on the standard variable rate. They’ve even included an example for you to marvel at so you can start imagining all of those lovely, lovely savings right away. 

They’ve broken down this mortgage into three further subcategories: The Retrofit Discount, Energy Improvement Discount, and the Sustainable Homes Discount. All of the discounts and their terms are clearly outlined, as well as the potential savings. Definitely worth checking out. 

Residential Mortgages 

They provide mortgages for houseboat moorings, woodland for conservation purposes, self-build, buy-to-let, remote builds and more. All of these mortgages come with an environmental slant. If your aims aren’t building and buying sustainably, then you simply won’t qualify. 

Their Ecology Hub outlines a number of successful consumer projects using their services, all in the area of providing community services, building passive structures and empowering local environments. 

Savings and Investments 

The building society offers an ecology ISA, promising never to invest your hard-earned cash in fossil fuels, tobacco or even the arms trade. It has easy access and regular saving accounts with an admirably healthy interest rate, as well as a 35 day and 180-day notice savings account. 

In truth, they’re one of the few banks out there fully immersing themselves in green banking and sustainability. 

The Future is Green 

As the world, or rather its political leaders, begins to finally wean themselves off of the petroleum drip it’s becoming more and more popular to go green. Banks are generally keen to ‘appear’ socially responsible so we can be pretty sure more green banking options will become available in the future.   

Regardless of the ridiculous statements of CEOs and banking fortunetellers, they will always follow the money. With more and more money flowing into renewables, they’ll either be swept along with the rest of us or be left standing on the beaches. 

Green banking and green mortgages are a complete no-brainer. What’s not to love? It’s impossible to hate both saving money and the environment, isn’t it?