Green Mortgages in Spain: how to finance eco-friendly homes

You've probably heard about green mortgages. They're becoming popular all over the world, especially in Europe and Spain. 

What are they exactly? 

These special mortgages offer better deals, like lower interest rates or bigger loans, to encourage people to buy or fix up energy-efficient homes. 

Nothing more, nothing less. As you'll see below, it's not complicated, so this type of financing should be on your radar.

As Spain strives to reach its sustainability and EU energy efficiency goals, more green financing choices are becoming available to assist buyers in investing in eco-friendly properties.

What is a Green Mortgage, and how does it work?

A green mortgage is a loan that offers benefits for buying or renovating energy-efficient properties. 

Reduced interest rates or improved loan terms motivate buyers to select environmentally friendly properties. For example, CaixaBank provides discounts for eco-friendly purchases or renovations.

In Spain, the process of getting a green mortgage is very similar to that of a traditional mortgage.

To qualify, you must provide the bank with certain documentation, such as an Energy Performance Certificate (EPC). This piece of paper proves the energy efficiency of your future home. 

Eligibility for a Green Mortgage in Spain

If you're a non-resident interested in a green mortgage, you must meet specific eligibility requirements. The property must have an Energy Performance Certificate (EPC) rating of A or B to qualify.   

The home should either be newly built to these high standards or be an older home undergoing significant eco-friendly renovations.

Financially, non-residents must provide income verification, a down payment (usually 30-40%), and a good credit score. 

Additionally, you'll need to show evidence of the property's energy efficiency or proof of planned renovations, which may require permits or certificates from approved installers.

Green Mortgage incentives and benefits for non-residents

There are several incentives for opting for a green mortgage in Spain, including:

1. Lower interest rates: Spanish banks may offer reduced interest rates, for instance, 0.25%-1.00% lower for energy-efficient properties.
2. Larger loan-to-value (LTV) ratios: For energy-efficient homes, green mortgages may provide higher LTVs, up to 75%, compared to the usual 60-70% for non-residents.
3. Tax incentives: Depending on the region, buyers may benefit from tax breaks when buying or renovating eco-friendly properties, as well as subsidies for renovations that improve a home's energy performance, such as installing solar panels or upgrading insulation.
4. Long-term cost savings: Energy-efficient homes typically have lower utility bills, which means long-term savings for homeowners. These savings, and others mentioned in this article, add up over time, making eco-friendly homes a smart choice financially and environmentally.

Best banks offering Green Mortgages for non-residents in Spain

Several Spanish banks offer competitive green mortgage products. Here are the best ones:

CaixaBank's Hipoteca Eficiente

Caixa provides discounts for purchasing or renovating eco-friendly properties. It does not include any study or arrangement fees and the appraisal of the property is free. 

CaixaBank also started offering the Efficient Bonified Mortgage (Hipoteca Eficiente Bonificada) at 4.21%. 

The average rate has decreased moderately compared to 2023, going from 4.63% to 4.18%, which represents a reduction of 0.45%.

Santander Hipoteca Verde

If your home has an energy efficiency certificate of category A or B, or a sustainable housing certificate like BREEAM Excellent, LEED Gold, or PASSIVE HOUSE, Santander will apply a 0.10% interest rate discount for the life of the loan.

UCI COMPRAYREFORMA 

The Spanish UCI bank also offers an interesting green mortgage called Buy and Renovate, which helps you purchase a home in need of renovation. The minimum price of the house or an apartment needs to be at least 120,000 EUR (150,000 in Madrid and Barcelona). 

The maximum refurbishment amount to be considered is 30% over the sale price (minimum 15,000 EUR). You have three months to submit the budget for the renovation and receive the amount allocated for it according to the appraiser's certification of work progress. 

If you're interested in exploring these options, consider reaching out to a mortgage broker. 

Homevest can connect you with top brokers in Spain, making it easier to compare offers and find the best terms for your needs.

If you've already found a property, Homevest can help you receive multiple offers so you can compare the best terms.

What types of homes qualify for Green Mortgages in Spain?

Green mortgages in Spain are available for:

1. Newly built, energy-efficient homes: Properties with A+, A, or B energy ratings.
2. Homes under eco-friendly renovations: Installing solar panels, improving insulation, adding energy-efficient windows, upgrading to energy-efficient heating and cooling systems, using sustainable building materials, and more.  
3. Renovation loans: Covers renovation projects to retrofit older homes, helping them meet modern energy-efficiency standards.

Final thoughts

Getting a green mortgage in Spain is a great way to get financial and environmental benefits. Not only can it help you lower your carbon footprint, but it also provides a smart financial investment through lower interest rates and potential tax breaks.

If you're looking to buy or renovate a property in Spain, considering a green mortgage might be the right choice and Homevest can help you take the next step towards making your eco-friendly dream home a reality.

Frequently asked questions

What energy rating does my property need to qualify?

Your property generally needs an EPC rating of A or B to qualify for a green mortgage.

Are there specific regions in Spain where green mortgages are more popular?

Both urban and rural areas of the country are seeing a boost in these types of mortgages.

Can I get a green mortgage if I'm renovating an older home?

Absolutely! Green mortgages are available for renovation projects that aim to significantly improve a home's energy efficiency.

Sources used and checked in October 2024:

1. Santander
2. Caixabank
3. UCI Sustainable and responsible finance
4. CincoDias
5. Empresa & Clima
6. Bolsamania
7. 20Minutos

We recommend obtaining professional or specialist advice before taking or refraining from any action based on the content in this article. The information in this article does not constitute legal, tax, or other professional advice from Homevest Limited. Prior results do not guarantee a similar outcome. We make no representations, warranties, or guarantees, whether express or implied, that the content in this article is accurate, complete, or up to date.