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Will a Mortgage Provider Lend on an Uninsulated House?

 11th Apr 2022

If you’ve got your heart set on a certain property, but it’s currently uninsulated, you may be wondering whether or not you’d be able to secure a mortgage to buy it.

Will a lender provide a mortgage on an uninsulated home? The simple answer is ‘yes’, although you should be aware that the number of lenders willing to do so is dropping rapidly as more and more embrace the concept of ‘green’ mortgages.

A Shift to ‘Green’ Mortgages?

Not all providers will agree to lend on an uninsulated home. In fact, it’s reported that upwards of 90% of lenders consider energy consumption when making a decision. And it’s easy to see why, with a Bank of England study showing that payments on homes with a lower EPC rating are more likely to be in arrears than payments on more energy-efficient homes. This is sparking a shift towards ‘green’ mortgages.

Green mortgages are mortgages that are tied to energy efficiency. The concept behind them is that those living in more energy-efficient homes will spend less on energy bills, thereby lowering their outgoings and making them a more attractive investment. Green mortgages may have lower rates than a standard mortgage or benefits such as additional lending opportunities for energy efficiency upgrades.

Government Goals

It is expected that lending on uninsulated homes and homes with poor energy efficiency will reduce even further following a recent announcement by the Government that mortgage providers will be expected to play a role in helping the country edge closer towards its goal of achieving net-zero emissions by 2050.

‘Mortgage lenders could play a vital role in driving the home energy performance improvements required to meet our Carbon Budgets and net-zero target. They are uniquely placed to influence mortgagors at critical trigger points, such as home purchase, renovation or re-mortgage’, notes a 2021 report.

What to Look Out For

It’s important to remember that not all insulation was created equal, and that even if the property appears to be insulated, it may still be difficult - if not impossible - to secure a mortgage on some types of property. In fact, it has been suggested that up to 250,000 UK homes may be unmortgageable because of older spray foam loft insulation that is now understood to affect the structural integrity of a building.

Lenders like Aviva already consider this to be ‘not acceptable’ for consideration.

It is widely being recommended that spray foam loft insulation is removed prior to listing a property for sale, removing obstacles that could emerge later in the sales process. At Extract Insulation, we offer efficient removal and clearing services, leaving your space ready for a new installation and maximising its value to potential buyers.

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