The homebuying landscape is constantly changing, and the current trend is a focus on sustainable choices, with a growing interest in green mortgages from those buying new homes and those who carry out home improvements on older homes. Research commissioned by Bank of Ireland shows that green mortgages are gaining prominence among first-time buyers and that large numbers of existing homeowners are likely to undetake home improvements to improve their home's Building Energy Rating (BER).

This shift is not only driven by environmental consciousness but also by financial advantages such as lower, green mortgages rates which have become popular for home improvers and for those entering the housing market.

 

• Home Improvement

The research revealed that as the benefits of home energy upgrades are becoming widely understood in Ireland, more than four in five homeowners are likely to undertake home improvements post-buying their home to improve its BER.

 

The Sustainable Energy Authority of Ireland

Grants are available to assist home improvers with funding for upgrades to their home. The Sustainable Energy Authority of Ireland (SEAI) adminsiter such grants. These grants fall under 3 general schemes, namely, Better Energy Homes Scheme; Better Energy Warmer Home Scheme; and National Home Energy Upgrade Scheme. There are two ways of accessing these grants:

1. By applying for the grants and managing the contractors and process yourself; and
2. By using an SEAI registered company to apply for the grants and manage the contractors.

SEAI grants are becoming popular among home improvers, with statistics showing that in the first half of 2023, approximately 220,000 energy upgrades were completed with grant aid through the SEAI. This figure is 150% up from the same period last year. A major benfit of these grants, aside from funding your home energy upgrades, is that they do not need to be repaid, thereby reducing the overall financial burden of home improvements.

 

Green Mortgage Rates: Home Improvements

Another financial benefit available to home improvers is the mortgage savings they can enjoy when carrying out home energy upgrades to their home. Homeowners who are planning improvements that will upgrade their home's BER to B3 or above should consider topping up their existing mortgage and availing of a lender's lower, green mortgage rate.

Lenders offer these options to home improvers. Last month Bank of Ireland introduced changes to their Green Fixed-Rate Mortgage which make home improvers who are drawing down funds to complete home improvements to get to a B3 BER or better eligible for a green mortgage discount of 0.30% at the point of drawdown. In many cases, homeowners who opt for the top-up and green mortgage rate could end up paying less overall on the top-up and the existing mortgage balance than they were originally paying on their standard mortgage rate.

 

• First-Time Buyers

Bank of Ireland's research indicates that six out of 10 first-time buyers are actively considering green mortgages, and 90% of them consider the BER a deciding factor when looking for a home. The introduction of Ireland's first green mortgage by Bank of Ireland in 2019 has marked a pivotal moment, with the bank reporting that over half of its new mortgage drawdowns in the first half of 2023 were green mortgages.

 

Green Mortgage Rates: First-Time Buyers

Green mortgages offer compelling financial incentives for first-time buyers, with interest rates up to one percentage point lower than other mortgage types. The following options are currently available in the market:

 

Lender	Name of Mortgage	Repayment Term	Interest Rate
AIB	Green 5 Year Fixed Rate	5 years	From 3.65%
Bank of Ireland	Green Mortgage	1 - 10 years	Discount 0.30%
EBS	Green 4 Year Fixed Rate	4 years	From 3.75%
Haven	Green 4 Year Fixed Rate	4 years	From 3.65%
PTSB	Green 5 Year Fixed Home Loan	5 years	Discount 0.20%

 

Taking Bank of Ireland's green mortgage as an example, a 0.30% discount on fixed rates can result in significant savings. For a first-time buyer who is borrowing €250,000 over 30 years, Bank of Ireland's five-year fixed rate of 4.25% will give you monthly repayments of €1,229.85.

If, on the other hand, you were buing a home with a BER of B3 or higher, you could apply for Bank of Ireland's Green 5 Year Fixed rate of 3.95% which will give you monthly repayments of €1,186.36. The difference between the monthly repayments for the green v standard rate is €43.49, which translates into a total savings of €2,609.40 over the five-year term.

 

Help to Buy Scheme and First Home Scheme

Another motivator for first-time buyers to "go green" is the government supports available to them when they buy homes with a good BER. Government supports are accelerating first-time buyers' journeys onto the property ladder and act as an incentive for first-time buyers to turn to new builds rather than second-hand homes.

Under the Help to Buy (HTB) Scheme, you can claim up to €30,000 if you are buying a newly built house or apartment, or if you are self-building your home. With the First Home Scheme (FHS), you receive up to 30% of the market value of your new-build or self-build home. If you intend on relying on both the HTB and the FHS, you will only be eligible to receive up to 20% of the market value of your home under the FHS.

 

The combination of environmental consciousness, attractive green mortgage rates, and government supports is reshaping the choices of first-time buyers and home improvers. The adoption of green mortgages not only reflects a commitment to sustainability but also provides tangible financial benefits, making it a compelling option for homeowners and those stepping onto the property ladder.

Thinking of going green? Use our Mortgage Calculators to compare these deals and determine which green mortgage is best suited to your needs and circumstances. Contact us for tailored advice.