Green homes plan raises eco-mortgage concerns

| March 3, 2010 | 0 Comments

Government plans to improve the energy efficiency of the UK’s homes involve as “Pay as You Save” scheme that will provide long-term loans to householders keen to install additional insulation, solar panels, wind turbines and the like.

The eco-loan will be repaid in instalments that should amount to less than the savings made on energy bills.

However, the debt will be tied to the property rather than the borrower, taking the form of a new kind of mortgage for which legislation has yet to be put in place.

According to a report in The Guardian, experts are voicing a plethora of concerns over the scheme.

For example, what happens if the homeowner defaults on the loan and who is responsible if newly installed green technology is below standard?

Meanwhile, property market experts are warning that an “eco-mortgage” on a property could reduce the amount traditional lenders are prepared to advance for a purchase.

Speaking to the newspaper, a spokesman for the Council of Mortgage Lenders said: “Environmental concern is rightly high on the political agenda, but even so, the new financing initiative needs to be considered carefully before being implemented.”

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