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Financial Dictionary - Green mortgages

Green mortgages

A green mortgage is a sustainable mortgage. In other words, it is a loan for building, buying or doing up a property with terms and conditions based on the energy efficiency of the home being financed. It is a way to encourage the development of energy efficient buildings, and to reward sustainable facilities that reduce energy consumption. This can result in average savings of €3,000 per household per year, while reducing pollution and environmental impact.

The interest rate is the main difference in the terms and conditions compared to a non-eco mortgage: the highest energy efficiency (A+) properties attract the lower the interest rates, while those rated G have the highest interest rates. There are not many differences in the other terms and conditions (fees, linked products, etc.).

Who can apply for one?

Any individual or company who wishes to apply for a loan for building, buying or doing up a property. The property must have an energy efficiency certificate with an A+, A or B rating to be classed as "green".

The applicant must, of course, have a good risk profile and the capacity to repay the loan, just like any other mortgage.

Buying and doing up properties

Energy-efficient housing requires specific construction characteristics and materials, and these are particularly expensive. So, it is common for developers to take advantage of green mortgages with lower interest rates, which they can, in turn, pass on to the buyers.

The same situation arises when we are going to do up a property using sustainable materials and procedures: thermo-acoustic insulation, solar panels, HVAC systems, etc. Doing up a property with these characteristics will increase its appraisal value, and reduce its water, electricity and gas bills.

The EeMap Plan

The Energy Efficient Mortgages Action Plan (EeMap) has been in place since 2018. Its members are working to ensure that green mortgages provide effective support for the European Union's energy policy, meet common standards for the entire EU and can contribute to the sustainable refurbishment of buildings.

The Plan already includes 23 organisations from the real estate sector and more than 37 financial institutions. Even though this market is only just getting going, some banks are interested in promoting this initiative in Spain.

There is not much competition in the current offering, but we expect more and more banks to join in over time. Repayment of these loans is more likely, as they increase our payment capacity by enabling us to save.


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