Government-backed trials aim to cut mortgage rates for energy-efficient homes as part of 26 innovative green finance projects receiving funding to improve energy efficiency in UK homes.

The government has unveiled today a £4.1 million funding supporting products such as mortgages that reward energy efficiency upgrades and loans tied to heat pump installations.

By retrofitting their properties, homeowners have the potential to save over £460 annually on energy bills.

The Department for Energy Security and Net Zero has announced that Perenna Bank will receive over £193,000 to develop a long-term, fixed-rate mortgage that incentivises energy efficiency by reducing the mortgage rate.

Another trial involves buy-to-let landlords adding the cost of energy-efficient improvements to their mortgage, allowing them to borrow the funds and include them in monthly repayments.

Ashman Bank Limited will receive £200,000 to design and develop this initiative, which assesses a property’s energy efficiency, suggests improvement options, and incorporates the work’s cost into the mortgage duration.

These projects are part of the larger effort to encourage homeowners to enhance energy efficiency, including measures like loft insulation and double glazing, resulting in significant energy bill savings.

Lord Callanan, Minister for Energy Efficiency and Green Finance, has emphasised the government’s commitment to long term energy efficiency goals and supports the development of innovative approaches to improve access to measures like loft insulation, double glazing and heat pumps.