Nationwide Building Society launches new product offering homeowners £20,000 interest-free loans

The zero per cent Green Additional Borrowing product allows customers to borrow between £5,000 and £20,000, up to a maximum of 90 per cent Loan-to-Value (LTV) across two or five-year terms.

Nationwide has also removed the six-month waiting period for new customers to apply for the loan, making it more accessible.

The move comes as part of the society's efforts to encourage home decarbonisation across the UK, addressing the fact that the country's 28million homes contribute to approximately 15 per cent of national greenhouse gas emissions.

The Green Additional Borrowing product is designed to be spent on improving a property's energy efficiency. Nationwide was the first major lender to offer green borrowing at zero per cent in June 2023, initially with a £15,000 limit.

However, take-up has been low, with just 1900 applications completed since launch until the end of September 2024. By increasing the loan amount and removing barriers to access, Nationwide hopes to encourage more people to apply.

Graham Lloyd, Nationwide's Head of Strategy and Sustainability, said: "We believe the UK's 2050 net-zero target can only be met through incentivising people to invest in their homes.

"As a mutual, we have chosen to make a difference, which is why we're making it as easy and attractive as possible for our mortgage customers to retrofit their properties."

The potential benefits of such improvements are significant. According to Rightmove's 2023 Greener Homes report, increasing a property's EPC rating from F to C could boost its value by up to 15 per cent.

On a typical property price of £285,000 as registered by the Office for National Statistics, that would mean a potential £42,750 of added value.

According to Barrows and Forrester, solar panels, on average, typically cost £5,875, but add £11,500 of value and fitting an EV - charger comes at a cost of just £1,000 - could up the value of one's home by almost £5,000.

Alongside the enhanced green loan offer, Nationwide has published a report titled "How low-cost finance supports the greening of UK homes" which outlines the actions needed to encourage home decarbonisation across the UK.

Their research found that:

1. Customers believe responsibility for funding energy efficiency lies primarily with Government.
2. There are numerous and complex barriers to retrofitting and finance is just one of them.
3. Many homeowners judge retrofit success by a reduction in bills.
4. Finance sits too late in the retrofit journey to drive any new demand – low-cost finance is just one component.
5. Zero per cent borrowing appeals to those already interested and planning a retrofit change.
6. The vast majority of zero per cent Green Additional Borrowing applications come from customers going direct to Nationwide because the minimal fees on small borrowing amounts drives very little commercial return for brokers.
7. Homeowners would value more support in identifying tradespeople.
8. Well-known technologies are being installed to fix perceived issues.

Based on these findings, Nationwide is calling for decisive Government action to promote the greening of homes.

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Their recommendations include more public awareness campaigns showing people the benefits of retrofitting and linking to information and advice, creating a National Retrofit Hub, which would support consumers from the beginning to the end of the retrofit journey, and encouraging energy companies to highlight retrofit benefits to customers.

The building society also suggested further collaboration between lenders and Government to support customers who can afford improvements.

Additionally, they propose incentivising banks and building societies to offer low-cost additional borrowing for retrofits to their mortgage customers.

Nationwide is not only offering green loans but also great savings. Customers can benefit from a £175 free cash offer to switch their bank accounts to Nationwide.

To be eligible, customers must not have switched into a Nationwide account or received switch cash from Nationwide since August 18, 2021. The offer applies to FlexPlus, FlexDirect, or FlexAccount.

Customers need to open the account online or through the app, switch their account from a different bank including at least two Direct Debits within 28 days, and pay at least £1,000 and make one debit card payment within 31 days of requesting the switch.

The £175 bonus will be paid within 10 days of meeting all criteria. Nationwide assures that switching is simple, reliable, and stress-free, taking just 7 working days.