Did you know that fuel bills play a part in mortgage applications? As part of the Mortgage Market Review, lenders are now required to weigh up how much a potential property might cost a borrower in gas and electricity as part of wider affordability 'stress tests'. It is even possible for a borrower's mortgage application to be declined when fuel costs are taken into account, if the lender thinks the gas and electricity bills may jeopardise the repayment of the mortgage.
Now there is another reason to keep fuel bills to a minimum. A project called LENDERS is calling for greener homes to be granted bigger mortgages. The idea revolves around disposable income, where borrowers, who are paying less in monthly fuel bills because the home they want to buy is energy efficient, should in theory, have more money to allocate to higher value monthly mortgage repayments.
It is hoped the estimated energy performance of properties will be taken into account during the lending process, with banks and building societies rewarding borrowers whose homes cost less to run.
As well as more borrowing power, the initiative should lead to reduced carbon emissions and less reliance on fuel. It is hoped buyers will be encouraged to purchase lower energy consuming properties or make energy saving improvements to a home they own.
The larger mortgages available for lower energy homes are hoped to stimulate an awareness in consumers of the benefits of buying a greener home and, longer term, this increase in demand should help drive (via values and speed of sales) the housing market and house builders to provide more energy efficient homes and increase the value of such homes.