Are Green Mortgages are the way forward or if there’s hidden value in renovating older properties.?
With house hunting in full swing, one must consider: are the lower interest rates of Green Mortgages for new-builds or properties with a BER rating of B3 and above enticing enough? Alternatively, does buying and upgrading a previously owned home offer more significant cost savings?
Currently, the most competitive mortgage rate from an Irish lender stands at 3.45% for a four-year fixed term, applicable to properties with a B3 rating or higher. Rates slightly increase to between 3.7% and 3.8% for homes rated C or below.
An Irish lender recently revised its mortgage offerings, basing discounts on the property’s energy efficiency. For instance, financing a €250k B3-rated property at 3.45% equates to monthly repayments of €1,026. In contrast, a €250k loan for an F-rated property at 3.85% results in €1,084 monthly, highlighting a monthly saving of €58, or €2,784 over four years, for the greener option.
First-time buyers, who represent over 62% of the Irish market, often face significant challenges in accumulating the required 10% deposit due to high rental costs, making them reliant on schemes like Help to Buy or The First Home.
Is there value in purchasing a lower BER-rated property? Yes, especially if renovation costs are within budget. Financial institutions may offer loans for such upgrades and, post-renovation, might adjust the mortgage rate based on the improved BER. Furthermore, these properties often come at a lower initial purchase price and qualify for SEAI grants of up to €30k, with additional potential aid from the vacant home scheme, providing as much as €50,000.
Older properties typically boast more internal and external space, which can be crucial for growing families. These homes are often better located concerning established transport links, schools, and amenities, reducing the necessity for multiple vehicles.
In conclusion, while the appeal of green mortgages for new, energy-efficient homes is strong due to lower interest rates, the potential savings and benefits from renovating older homes cannot be overlooked. Increased support and simplified processes for renovation grants would further enhance their attractiveness. Additionally, expanding the Help to Buy scheme to encompass all property types could open the market to more young buyers who are currently excluded.
