blog shmadrid castellano   blog shmadrid
Administrative procedures

Are You Familiar with Green Mortgages?

wooden house with coins next to it
Written by Daniella

There are several green mortgages or green loans on the market at the moment, and if you have the intention of buying or renovating a property, it can be interesting to check out if you can take out a green loan.

Green loans – or energy efficiency mortgage programs – focus on the environment to improve a property’s energy efficiency. If you invest in improving energy efficiency, you can reduce your energy consumption and save on your electricity bills, while doing your part to prevent climate change.

Today, this article by ShMadrid will tell you a bit more about green mortgages.

Related article: Requirements for a Mortgage in 2020

What do you know about green loans? Here are some interesting facts

coins with small plants and alarm clock

Photo via Pixabay

If you don’t know anything at all about green mortgages, then let’s start with the information that this loan is only granted under very special conditions, related to the energy efficiency of the building. This means that the installations of a property must be sustainable, resulting in lower electricity consumption.

A certain part of all CO2 emissions result from gas from residential homes, and this is what causes the greenhouse effect, the main source of global warming. Sustainable housing, however, can have a positive influence by significantly reducing these effects.

And as everyone is (finally) concerned about saving the Earth, they have come up with a new form of financing, making it cheaper to borrow money from the bank to improve a home’s infrastructure. Do you know what the requirements are for being granted a green mortgage?

First of all, any company or individual can apply for it. The most important characteristic of the mortgage has to do with the building’s energy label. The higher the score or qualification, the lower the interest rate on your mortgage.

A property is considered to be “green” when the energy efficiency certificate issued has a score of A, B or A+. And this certificate should be arranged for any property that is for sale or for rent, ever since 2013. One must be able to have insight in the consumption of a property and its emission rate.

If a property doesn’t have this certificate, the owner could get a fine of 6000 euros, but these rules don’t apply to properties of 50 m2 (or less) or rental properties that are rented out for less than 16 weeks per year. These are exempt.

Related article: ITP, the Unknown Tax

key in front door

Photo via Pixabay

Who is in charge of issuing these energy certificates? The people that are directly responsible for it are private companies with technicians that will visit and check your property. They will provide you with the necessary documentation (including the label), in accordance with the surface of the building.

The main objective of getting each house more sustainable is to lower CO2 emissions, and this can only be achieved by installing effective installations that reduce energy consumption.

According to the European Commission, a property will be qualified “sustainable” when it saves 30% on its energy. In fact, homes that have an A+ label save considerably more than that, and this could mean saving up to thousands euros per year! But this is only when installations use natural resources, leading to a minimum use of energy.

The only downside to constructing an A+ house is that it is very expensive, and that is why property developers can also apply for green mortgages, which can later be transferred to the buyer of a property.

In 2019 a new mortgage law went into effect, and in it they refer to a large part of the costs of a mortgage being paid by the bank, but so far, green mortgages are not mentioned anywhere in this new law.

So in principle, banks would not be obliged to pay legal document tax, but there are entities that automatically become liable.

Do you have other useful information about green mortgages?

About the author


Daniella loves to write and translate. Her bucket list is filled with beautiful places she still needs to visit.

Leave a Comment