Mortgage Lenders Back Green Deal

20 May 2013

Two of the UK’s major mortgage lenders are getting behind the Green Deal, at least provisionally.

Lloyds Banking Group (LBG) and Nationwide have confirmed that they support the Government’s latest energy and carbon efficiency initiative, but mortgage lenders as a whole remain tentative. revealed that both LBG and Nationwide were supportive of making energy efficient improvements to homes.

A spokeswoman for Lloyds Banking Group told the website: “We are supportive of any initiative that helps homeowners to improve their property, both in terms of efficiency and comfort.”

Andrew Baddeley-Chappell, head of mortgage policy and strategy at Nationwide, said: “Nationwide recognises the benefits to all that comes from investment in improving the energy efficiency of our homes and supports the aims of the government’s Green Deal.”

However, mortgage lenders require notification ahead of any “major” changes made under the Green Deal.

Because any changes made to a property can impact its value, individual mortgage lenders will adopt their own approach to determine whether a home improvement measure would impact the mortgage of a property.

For example, Solid Wall Insulation – which is considered a “major” change – can impact the appearance of a property, which will impact its value for the better or worse. Because mortgages are tied in to the re-sale value of a property, lenders would need to assess the situation.

At the other end of the spectrum, it is thought that “minor” changes, which can include measures such as Cavity Wall Insulation, Loft Insulation, and glazing replacement, would not need authorisation from a lender.

The value of the Green Deal plan in the first instance may also require authorisation from the lender. Nationwide confirmed with that plans for a sum of £10,000 or less would not need consent, while those over £10,000 would need looking at due to the nature of the unsecured loan offered by the scheme.

In this case, Cavity Wall Insulation and Loft Insulation, which generally cost hundreds not thousands, could be arranged through the Green Deal without authorisation from the lender. The addition of Solar PV and micro wind generation would require consent.

For lenders, the Green Deal remains an unknown entity that will require further vigilance. The Council of Mortgage Lenders (CML) has confirmed that it will continue to work closely with DECC to monitor and review the situation.

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