Taking advantage of the dynamism of the real estate and mortgage market, some financial entities have decided to bet on green mortgages to finance the purchase of energy efficient homesa financial product that is prospering due to increased demand and the support of European funds.
Deustche Bank premieres the DB Sustainable Mortgage exclusively for the purchase of first homes with Energy Efficiency Certificate A or B. The loan will be available at both variable and fixed rates and customers will have a Personal Manager at their disposal who will help them beforehand and from the first day with the contracting of the mortgage.
Under the slogan ‘Taking care of your home is taking care of everyone’s home’, this new product is in line with the entity’s sustainability strategy, which plans to reach 200,000 million euros in financing and sustainable investment in 2023.
The DB Sustainable Mortgage at a fixed rate has a nominal interest rate (TIN) of 1.94% and an annual equivalent rate (APR) of 2.68%, as long as the client meets certain requirements: it is necessary to direct deposit the salary and at least three monthly receipts, as well as hiring a credit and debit card, home insurance and life insurance.
On the other hand, the variable rate DB Sustainable Mortgage has a fixed interest rate of 2% during the first year and a spread of 1.40% plus Euribor for the rest of the period, while the APR is 2.89%. . In this modality, the required relationship is the same as for the fixed rate, adding contributions to a pension plan.
In all cases, the DB Sustainable Mortgage has a term of up to 30 years, a minimum amount of 20,000 euros and a maximum coverage of 80% of the lower value between the purchase-sale price or appraisal value.
For its part, Triodos Bank, which was a pioneer in 2013 in associating the degree of energy efficiency of homes with an interest rate, has incorporated the fixed rate into its range of mortgages with a purpose, in addition to the mixed and variable rate that already commercialized. The better the energy efficiency of the home, the client will pay less interest.
Thus, in the fixed Triodos Mortgage, depending on the home’s energy certification, the fixed interest ranges from 1.70% TIN (2.18% APR) to 1.94% TIN (2.42% APR).
The entity indicates that if during the term of the loan there is an improvement in the energy efficiency of the home financed, the borrower may contact the bank to find out regarding the current offers at any given time and thus be able to reduce the applicable interest rate. It does not have an opening commission and the binding conditions are the opening of a Triodos current account and the contracting of life insurance and damage insurance.
Other entities have also been offering eco mortgages for some years, such as freebank, Banco Mediolanum, BBVA, Santander, Sabadell, Bankinter and Mortgages.com. Depending on the bank, a B, A or A+ Energy Efficiency Certificate is required and it is also possible to obtain financing for the rehabilitation of the property in order to improve its sustainability.
“These banks, in general, apply a lower interest when a sustainable home is purchased. The average reduction is regarding 0.10 percentage points. There are also entities that ask to hire fewer products to discount the interest rate or charge fewer commissions” , indicate from the financial comparator HelpMyCash.comwho point out, however, that “green mortgages are not necessarily better than mortgages for conventional homes. In fact, there are banks that sell cheaper mortgages than eco loans“.
The green mortgage market has not yet fully taken off in Spain, given that most banks do not yet market products of this type, since there are not many people who buy homes with a very high energy rating. However, this might change in the near future. “In principle, the Government plans to use European funds to improve the energy efficiency of Spanish homes through renovations. As the subsidies will not cover the entire cost of the works, there will be a part that will have to be financed with a mortgage loan”, comment from HelpMyCash. If the number of rehabilitations grows, it is likely that more banks will be encouraged to grant green mortgages with special conditions.
