The upgraded tool improves affordability of greener homes
Leeds Building Society has announced the launch of a new tool which improves the chances of owning a greener home by changing the way it assesses mortgage applications on selected modern properties.
The upgraded affordability calculator, which is used by mortgage brokers, takes into account the reduced monthly outgoings on utilities associated with newer, more energy efficient homes, meaning increased lending allowances for mortgage applicants.
The update gives customers improved affordability for homes built since 2020, and factors in the type of property a customer is seeking a mortgage for. Leeds said that the changes it implemented aim to reduce the deposit hurdle for many first-time buyers. By reducing the amount that borrowers need to save up to get on to the property ladder, the mutual will allow customers to borrow more than they could on an equivalent, less energy efficient property.
“This latest innovation is part of our ongoing work to support our members in reducing their carbon footprint,” Richard Rothwell (pictured), commercial development manager for Leeds Building Society, said. “Housing is responsible for 16% of the UK’s total emissions, so it’s important as a lender that we play our part.
“Thanks to the changes we have made, we can help more customers get the greener home they want. For example, a customer seeking a residential mortgage up to 90% loan-to-value against a new build standard property valued at £225,000 could borrow £210,000 versus £199,000 on a non-new build property.”
The changes, which were made to support the mutual’s members in reducing their carbon footprint, have been welcomed by developers, industry experts, and intermediaries.
Emma Harvey-Smith, program director at the Green Finance Institute, said it was wonderful to see Leeds Building Society offering customers improved affordability on greener properties.
“To successfully decarbonise the UK’s housing stock, we need to encourage more and more people to live in energy efficient homes,” Harvey-Smith stressed. “Incentives such as preferable mortgage rates for greener homes – combined with increasing consumer awareness – will be vital to boost demand.
“Mortgage lenders and intermediaries will play a key role in educating homeowners which is why the Green Finance Institute launched the Broker’s Handbook – a first-of-its-kind resource that provides key information on the different green home retrofit solutions and technologies available to consumers.”
Adrian MacDiarmid, head of mortgage lender relations at Barratt Developments, added that building to the future homes standard is on the mind of every builder in the UK.
“Factoring the savings from energy efficiency into affordability assessments means that customers looking to buy a new home may be able to borrow more, making green homes even more accessible,” MacDiarmid stated. “This move by Leeds Building Society represents an important step in our journey to net zero.”
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