Nationwide launches 0pc loan for green home improvements

MORTGAGE borrowers are being offered interest-free loans to improve the energy efficiency of their homes for the first time.

Nationwide, Britain’s biggest building society, will let up to 5,000 of its mortgage customers borrow £5,000 to £15,000 to pay for green improvements without having to pay interest. The 0pc Green Additional Borrowing home loan, to be launched on June 1, must be used for “non-structural” improvements such as solar panels, air source heat pumps and insulation, as well as upgrades to windows and boilers.

Electric car charging stations, smallscale wind turbines, investments in rainwater harvesting and upgrades of utilities such as lighting will also be covered. The interest-free period will last for two to five years. After this borrowers will pay interest at the mutual’s “standard mortgage rate”, currently 7.74pc.

Henry Jordan, director of home at Nationwide Building Society, said: there was a need for businesses and the Government to encourage households to upgrade residential properties, which are one of the biggest causes of greenhouse gas emissions.

He said: “A key barrier to making homes more energy efficient is not only the upfront costs associated with retrofitting, but also the payback period of making such changes.

“It’s clear to us that only meaningful incentives will help shift behaviour. So, by launching this, we can test and understand whether offering 0pc interest will encourage members to make the necessary green home improvements where the costs of finance may have, until now, discouraged them.”

It comes amid government efforts to enforce an energy performance certificate (EPC) rating of C by 2035.

Britain’s 29m homes produce around 16pc of the country’s emissions, according to Nationwide. But schemes to incentivise homeowners to make the necessary and often costly upgrades to their homes have faltered.

The Government has a heat pump scheme, which offers a voucher of £5,000, but take-up has been well below the target of 30,000 a year.