Green mortgages for efficient buildings

The crisis that broke out a decade ago made aid for those who opted for an improvement in the environment more fashionable than ever. Both from public administrations and the private sector. A great example can be seen in the automobile sector, so damaged by the economic recession.

Very soon, governments offered grants to those who replaced their vehicles with less polluting ones. And dealerships offered loans with minimal interest or even at 0%. However, what about housing? Well, fortunately, today we see that the concept of green mortgages has emerged. Financing plans for homeowners that offer better terms for those who want to buy a house, provided they opt for energy efficiency.

The concept is new because, until recently, it was unknown. But it was Triodos Bank that, at the beginning of this decade, began to include the possibility of a better calculation of interest for those mortgages granted in buildings with certified energy efficiency. And in this way we can say that green mortgages were born.

Right now, it is not only Triodos Bank but various financial entities that have launched a discount plan on the interest rate of mortgages granted for properties that are environmentally friendly. What is this phenomenon due to?

According to Triodos Bank, the best mortgage conditions are granted because, in buildings equipped with energy efficiency systems, defaults are much lower. If we put it in figures, the financial entity claims that, since 2014, it has granted more than 1,700 green mortgages worth 99.8 million euros. And the delinquency rate for individual homeowners has been 0%, not a single monthly payment has been missed. In the case of cooperatives and housing developers, the delinquency rate was only a scant 0.04%.

These figures indicate that, in Spain, defaults on mortgages for this type of housing are minimal. And while green mortgages are granted as a way for the entity to help the environment, it is clear that they provide more security. What is behind this low delinquency in this type of mortgage loans?

1. Typically, those who buy a home with energy efficiency tend to be more concerned about their expenses, and these are not homes for speculation or investment, but rather it is more common for them to be properties intended for living and being used for a long time.
2. Homes with energy efficiency are not only more beneficial for the environment but also significantly impact the owners' wallets. According to Triodos Bank, the first green mortgages granted were for a development in Tres Cantos (Madrid), in apartments of 60, 90, 120, and 150 square meters. The average cost for air conditioning and heating for all of them is 48.87 euros per month. This represents a 75% savings in climatic comfort compared to conventional Spanish homes.

How to access one of the green mortgages?

Although it was Triodos Bank that began to reduce interest rates on mortgages for contracts in buildings with high energy efficiency, it has only been recently that there has been talk of green mortgages. This is partly due to the fact that the European Union itself has taken action on the matter, and the European Mortgage Federation has launched a pilot test for green mortgages.

Bankia, for example, already has a mortgage plan in place with interest rate discounts for energy efficiency for 150 homes, and BBVA has launched them in Turkey thanks to its subsidiary. For homeowners, the benefits are clear: on one hand a mortgage with better conditions and on the other a lower consumption that comes with such homes.

If we look at the conditions of Triodos Bank, we can observe the implicit discount. If a 150,000 euro mortgage over 25 years would, based on the bank's usual conditions, cost 599.90 euros per month, with the discounts on the interest rate, that amount could be reduced to between 570.45 and 554.81 euros. Up to almost a 9% discount on the monthly payment.

What criteria are applied to grant green mortgages? Triodos applies a scale of eight positions from more efficient to less efficient. In the A+ rating, the one with maximum energy efficiency, it is necessary to install a double-flow mechanical ventilation system. This is because double-flow ventilation not only improves our health but also avoids the use of air conditioning systems in most situations. It is one of the most important solutions in energy efficiency that can be installed in our homes.