In This Article
Does EPC affect mortgage on a residential property?
EPC rating can have an effect when you are taking a mortgage on a residential property. If the property is showing a very poor EPC rating, for example, F or below, some lenders may not wish to lend on the property. It will often be down to the surveyor who visits the property to confirm whether it is suitable for lending or not.
The EPC rating is more of a factor on buy to let properties. However, it can still be a consideration for lenders offering residential mortgages too.
Some lenders have begun to offer schemes to reward people buying properties that have a good EPC rating. A common name for this scheme is ‘green mortgages’ for properties with an EPC rating of A-C. A green product usually has a slightly lower interest rate than other products within the lender’s range.
Your mortgage adviser would be able to explain the difference in rates and fees for both green products and standard products. They would be able to tell you who you would qualify for a mortgage with and whether they offer a green product to reward customers for their EPC rating.
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Is an EPC rating important when buying a house?
An EPC rating is an important thing to take into account when you are buying a house.
This could be for several reasons.
The first is that the EPC rating is a good guide of how energy efficient your home is and how much it will cost to run. The higher the EPC rating, the more cost-effective your house will be.
Houses with an EPC rating of A will hold heat very well but be cool enough in the summer. They also have very energy-efficient fittings within the house leading to a lower utility bill.
Another reason that you should take into account the energy rating of a house is that you may wish to let the property in the future.
The EPC rating of the house will determine whether you are allowed to put new tenants into the property.
Find an energy certificate for a property. This includes homes, business properties and public buildings using Find an energy certificate from Gov.uk
Does EPC affect mortgage on a buy to let property?
An EPC rating is an important thing to take into account when you are buying a buy to let property.
It is now a legal requirement for your property to be rated between A – E if you wish to put a tenant in the property.
From 2025 onwards, the rule is set to change meaning for the property will need to be between A-C to be able to let it out.
This could mean that significant money needs to be spent on the property to bring it up to the legal standard for tenants to live in it.
If I improve my EPC rating, will I get a cheaper mortgage?
It may be possible that if you improve your EPC rating, you could then qualify for a lower rate mortgage.
Green products are there to reward customers that have an EPC rating of C or above. There are also some buy to let mortgage lenders that offer green products for the same EPC ratings. Not all lenders offer these products, but an experienced mortgage adviser would be able to locate a lender that does.
In addition to the mortgage, improving your property’s EPC rating is prudent to help you achieve lower bills on the property whilst looking after the planet.
Does EPC rating affect your house price?
It may be that a person is willing to pay a premium if the property has a high EPC rating because it will save them needing to improve it in the future and also save them money on their bills.
On the other hand, if the property has a very low EPC rating and is not energy efficient at all, this may affect what a person is willing to pay for the property.
If it is believed that the property requires significant investment to improve the EPC to an acceptable standard, the buyer will likely try to reduce the price of the property to take this into account.
Is it costly to improve your EPC rating?
Depending on what needs doing, it can be very costly to improve your EPC rating to an acceptable standard.
For example, if you have an EPC rating of F but needed to get this to a C, a lot of work is likely needed. Sometimes making a small change to an EPC rating, can be as simple as changing the light bulb to a more efficient type to boost the rating.
However, to increase the rating significantly, would likely mean a lot more work to do. This could mean improvements such as new windows or insulation in the walls. As you may have guessed, this is not cheap to do.
A professional can give you your EPC rating telling you which areas you need to improve and sometimes giving you an idea of what the likely cost would be.
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Does EPC affect mortgage and when taking a bridging loan?
EPC ratings do not usually affect bridging loans. This is because bridging loans are taken against properties that do not qualify for a standard mortgage.
This may be due to the EPC rating of a property not meeting the criteria of a term mortgage. It may be that a bridging loan is taken before doing the necessary work to improve the property, making it fit for a standard mortgage.
If you are thinking of taking a bridging loan to carry out improvements against the property, you should always take professional advice.
Conclusion
The rating of your EPC certificate can affect your mortgage on both residential and buy to let properties. It may be that only a small improvement is needed to get your property to a grade C to take advantage of the green products in the marketplace. Sometimes properties require a lot more work to boost the EPC rating to the level that is needed.
If you want to find out more about how your mortgage may be affected by your EPC rating, I NEED ADVICE can help.
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