Green Mortgages: What they are, how to get one, the advantages

The green transition of the European real estate market has also brought changes in the mortgage market.

In 2018, the Energy Efficient Mortgages Pilot Scheme developed a green mortgage model. With this type of mortgage, banks facilitate the purchase of high energy efficiency (A or B) properties, or properties to be renovated with a 30% or more reduction in energy demand based on energy consumption and CO2 emissions.

For the latter case, following renovation work, an Energy Performance Certificate must be provided showing that energy efficiency has improved by at least two classes.

The Green Home Directive

On March 14, 2023, the European Green Home Directive was approved, which provides for work on 15% of buildings in energy class G—the most energy-intensive—in every member country. The goal is to bring all European buildings into energy class E by January 1, 2030 and class D by 2033.

According to ISTAT, in Italy, approximately 1.8 million out of 12 million residential buildings require energy efficiency renovation.

The only exemptions to the Green Home Directive are buildings in historic town centers or those declared to be historical assets, second homes used for less than four months a year, churches or places of worship and properties of less than 50m².

The importance of green mortgages and their benefits

Thanks to this directive, green mortgages become a positive tool in the green transition of the real estate market.

This type of mortgage can be used to finance between 80% and 100% of the value of the property and can be granted with a fixed or variable interest rate, such as standard mortgages.

The advantages of a green mortgage are:

• interest rate 10% lower than for a standard mortgage;
• lower or no processing costs;
• insurance policy discounts.

In addition, opting for a green solution means lower energy consumption costs, purchasing a property with a high economic value, and being able to take advantage of tax incentives and deductions.

The banks that grant green mortgages

There are about ten banks in Italy that grant green mortgages, but, given the new Green Home Directive, their number is increasing. Therefore, we suggest that you ask your bank which may have made this type of mortgage available.

Source: AdnKronos