Green mortgages, all you need to know: how to apply to banks, facilities and advantages

The focus on sustainability is increasing year by year, in an attempt to safeguard the future and guarantee a better tomorrow for new generations. And mortgages are also becoming increasingly green. In order to find a homogeneous model for all EU countries, enabling banks to make it easier for homeowners to purchase energy-efficient properties, green mortgages were launched Europe-wide in June 2018 thanks to the Energy Efficient Mortgages Pilot Scheme.

Forty-two European banks participate in the project. 10 of them are Italian: Banco Bpm, Bnl-Bnp Paribas, Bper Banca, Cassa Centrale-Credito Cooperativo Italiano, Crédit Agricole-Cariparma, Friulovest Banca, Monte dei Paschi, the Italian branch of Société Générale, UniCredit,Volksbank Alto Adige.

According to the definition drawn up by the EU Commission together with the European Mortgage Federation, green mortgages are subsidised loans intended to ensure an improvement in the energy efficiency of the home of at least 30%. They are granted by banks in three cases: to purchase a property with high energy efficiency (class A or maximum B), whether it is a first home and sometimes a second; to renovate one's home in order to improve its performance and energy efficiency; and finally to build a property of energy class A or maximum B.

But what are the benefits of green mortgages? In green mortgages the relief is normally at the rate level. In fact, each bank decides to what extent it will facilitate its customers, with the near certainty of benefiting from a lower rate than on a non-green mortgage. Generally speaking, however, it can be said that with green mortgages, borrowers can enjoy lower interest rates, a more favourable Loan To Value (LTV), and considerable savings over the years on electricity and gas utilities.

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What are the requirements for applying for green mortgages from banks? What documents are needed? Well, in addition to the normal documentation (i.e. identity card, tax code and income documentation), it is necessary to present the bank with documents certifying the eco-friendly characteristics of the property for which the loan is requested: for the purchase, the house must be class A or B or comply with certain efficiency parameters; for renovation, it is necessary to present the cost estimate and demonstrate that the work will raise the building's energy class, improving its performance by at least 30%; if, on the other hand, you want to buy a green building house, along with the cost estimate you must certify that the property meets certain sustainability criteria.

As can be seen, the aspect of energy class is central to the offer of a green mortgage, but while in the case of purchase the threshold of class B has been set as the minimum acceptable, in the case of renovation the indication is more general. In fact, one speaks of an improvement of the existing class, so one has to consult what the various banks offering this type of solution say. Moreover, there may be no limitation depending on whether it is a first or second home.