18 April 2007
How going green can save cash on bills – and your mortgage
The environment, global warming and cutting your carbon emissions are rarely out of the news at the moment. These issues can affect homeowners and those looking for a new property, as more and more incentives are announced for people looking to go green.
The average UK citizen emits a staggering 13,000 kilograms of carbon-dioxide equivalent greenhouse gases every year through things like transport, heating, appliances, the import of foodstuffs and the production of consumer goods and household energy use accounts for 27% of the UK's carbon dioxide emissions.
One of the key contributing factors to increased carbon dioxide emissions is the building and running of homes. The UK has a target of cutting its overall carbon emissions by 20% by 2010, but it looks likely that this target will be missed unless action is taken as soon as possible.
To help meet the target, homeowners can make changes to their property. One example of this is the use of insulation, which is one of the most effective ways of improving the energy efficiency of your home. For example, insulating a loft can save up to £200 every year in heating bills and installing double-glazing can have a similar effect.
A typical boiler has a lifespan of around 15 years and can account for about 60% of your carbon emissions. It may well be worth installing a new energy efficient condensing boiler to cut your heating costs. And a heating system with controls and a thermostat can also cut your bills and your emissions – as turning your thermostat down by as little as one degree can cut your bills by 10%. Also, replacing just one lightblub with an energy saving version could shave £10 from your annual electricity bill.
The latest budget announced a zero stamp duty tariff on so-called zero-carbon homes, which is defined as a home which uses less energy than it generates. This can be done, for example, through the installation of solar panels and wind turbines offsetting the energy used by appliances. Of course there are very few zero-carbon homes in the UK at the moment to benefit from this cut in stamp duty. But the numbers are expected to increase in the coming years
.The Chancellor of the Exchequer has also been looking at how financial providers, such as building societies, can offer incentives to those looking to become more energy efficient. Saffron Building Society, for example, is one lender which is rising to the challenge by offering a new mortgage aimed specifically at those who want to make their home more energy efficient and therefore reduce their carbon footprint.
The product is for those who are about to move into a home or whose home already meets energy efficiency measures. If the home meets five out of ten specified measures, then the borrower is eligible for a great rate of 5.60%, which is the Bank of England base rate, currently 5.25%, plus 0.35% for the life of the loan. Borrowers will also receive a free home energy performance certificate and an energy efficiency pack full of useful tips.
Expect to see many more mortgage products on the market offering incentives for energy efficiency as this is an area where the smaller lenders are leading the way, with larger mortgage lenders still dragging their feet when it comes to offering "green" products. Grant schemes to help pay for micro energy generation technology like solar panels and turbines are also expected to increase in the future.
Always take advice before making any financial decision. Going green and green mortgages will also be the subject of Saffron Building Society’s next podcast, available from iTunes in May.
