Our Guide on Mortgages On Properties with Solar Panels

Getting a Mortgage with Solar Panels

Getting a mortgage on a property with Solar PanelsThe presence of solar panels on a property that may affect t... is a little complicated when compared to regular mortgages. The reason for this is that the bank will want to see how much of your income you are using towards paying off the loan, and if you have solar panels installed on your roof they can be seen as an additional expense. However, there are ways around these problems and we’re going to show you some of them in this article. We will try to answer frequently asked questions on the topic of “Mortgages with Solar Panels” such as why is it difficult getting a mortgage with solar panels, are the solar panels leased or owned, can I remortgageRefinancing an existing mortgage with a new mortgage. if I have solar panels, what to consider when applying for a mortgage for a solar panel home etc.

Post Topics –  Solar Panels & Mortgages

Solar Panels & Mortgages

Halifax Mortgage For Solar Panels

Why is it difficult getting a mortgage with solar panels?

Are the solar panels leased or owned?

Can I remortgage if I have solar panels?

What else do I need to consider when applying for a mortgage for a solar panel home?

Next Steps – Solar Panels Mortgages

FAQs – Solar Panels Mortgages

Solar Panels & Mortgages 

The rise in the popularity of solar panels may be easy to understand:

• they are environmentally friendlier and more sustainable than the use of fossil fuels;
• after the initial installation costs, they continue to generate free electricity throughout an exceptionally long life; and
• the panels themselves are becoming more efficient and cheaper to buy.

The downside of getting your energy cheaply and in an environmentally friendly way comes from an unexpected source – the difficulties you are likely to encounter when looking for an equally eco-friendly home mortgage.

Let’s take a closer look to see why that might be.

Halifax Mortgage For Solar Panels

Every mortgage lender has different criteria for mortgages on the property with solar panels. Some lenders will not even consider applications for loans where the applicant owns the solar panels outright. Others will only accept applications where the applicant leases the solar panels from a third party. And still, others will require the applicant to own the solar panels outright. For example, Halifax bank provides green living reward points for customers who apply for a mortgage on their properties with solar panels. These points can then be redeemed for cash prizes. This means that if you get a mortgage through Halifax bank, you must own the solar panels outright, otherwise, you won’t qualify for the rewards program.

If you do decide to apply for a mortgage with solar panels then we would suggest you contact a specialist mortgage broker who can help you with a suitable mortgage deal.

Why is it difficult getting a mortgage with solar panels?

Just as one of your main reasons for wanting to install solar panels is likely to be cost-saving on the energy you consume, so those same financial issues might make it more challenging to get a mortgage.

Solar panels are very energy efficient but expensive solutions to install – anywhere in the region of £6,000 or more.

Until relatively recently, therefore, many homeowners were attracted to offers from companies offering to install solar panels entirely free of charge – and to pay the cost of maintaining and insuring them against loss or damage into the bargain. The homeowner could simply take full advantage of the free energy they generated. These were so- called “Rent a Roof” schemes.

In return, however, the homeowner had to agree to keep the panels and was tied into a long – typically 25-year – contract with the respective solar panel company. Solar energy companies earned their income by selling energy to the National Grid through Feed-In Tariffs.

Although the Feed-In Tariff came to an end in March 2019 – and with them, the Rent a Roof schemes – explains the Solar Guide, past contracts with solar panel companies continue to have many years to run.

If they sold their home, the installed solar panels, and the ongoing contract to keep them, had to pass on to the new owners. Unsurprisingly, this may have put off some prospective buyers.

It certainly puts off many mortgage lenders who remain concerned that an integral part of the mortgaged home – it’s roof – was subject to a complicated lease arrangement. As the Council of Mortgage Lenders (CML) warns, in typical Rent a Roof schemes, the equipment remains the property of the solar panel provider. At the same time, the installation represents a lease agreement for the airspace above the roof between the homeowner and the solar panel provider. This significantly complicates the valuation of the property – an essential calculation as far as any mortgage lender is concerned.

Are the solar panels leased or owned?

That is not to say that you will find it impossible to secure a non-standard mortgage on a home that has solar panels installed.

If the solar panels are subject to a lease agreement – such as a Rent a Roof scheme – you might, indeed, encounter greater difficulties than usual in securing a mortgage. But there are still lenders prepared to take on the risk. As always, when the pool of potential lenders is smaller and the perceived risks more significant, you may need a bigger deposit or may be offered a less favourable rate of interest.

To help you find a suitable lender – with a competitive mortgage deal – therefore, you might want to draw on the expertise and experience of ourselves here at Needing Advice.

If you are interested in buying a home with solar panels that are fully paid-for and not subject to any lease agreement, the lender has a much easier job of calculating the value of the property – and considering the grant of a mortgage in the normal way.

Can I remortgage if I have solar panels?

From the foregoing, you might also appreciate that it is possible to remortgage a property with solar panels installed – but it again depends on the circumstances.

If the panels are owned outright and not subject to any lease or rental agreement, there is unlikely to be any difficulty.

What else do I need to consider when applying for a mortgage for a solar panel home?

It may be possible for the owner of a property with leased solar panels to buy out the lease – typically at a price based on the original cost of installation of the panels, plus a premium. This might make it easier to secure a mortgage.

Bear in mind, too, that the location of any solar panels may hinder or prevent your making alterations or improvements to any property. If the lease agreement for the panels prevents their being moved or disturbed, for example, you must wait until the agreement has ended before making such building alterations. 

These complications – together with any problems you may encounter with a lender in securing your non-standard mortgage – may also delay the completionThe point at which a property purchase is finalized and owne... of conveyancing.

Next Steps – Solar Panels Mortgages

If you are thinking of buying a property with solar panels installed or want to remortgage a home that already has them, you might want to draw on our expertise, experience, and specialisation in arranging mortgages on such properties. Please contact us today.

FAQs – Solar Panels Mortgages

Can I get a mortgage on a property with solar panels?

Yes, it is possible to get a mortgage on a property with solar panels. However, this is not without its challenges. The main issue is whether the solar panels are owned by the homeowner or leased by an external company.

If they are owned by the homeowner, then the bank can calculate the value of the property using standard valuation methods. They will then be able to assess the loan against the full market value of the property.

However, if the solar panels are leased, then the bank cannot use these same methods to determine the value of the property. Instead, they will look at the amount of money that was spent on installing the panels. In addition, they will also look at how long the lease lasts.

There are many other factors, that you may need to consider while getting a mortgage on a property with solar panels. We would suggest contacting a mortgage broker before starting the application process.

What are eco-home mortgages?

An eco-home mortgage is one where the borrower pays less interest than usual because the bank considers the environmental impact of the property. It is important to note that the bank does not pay more for the loan, rather it reduces the amount of interest charged.  

How solar panels can affect a mortgage application?

There are various reasons why solar panels could affect a mortgage application. For instance, some lenders require a minimum level of roof space as part of the lending criteria. Others may ask about the size of the panels and the number of panels. Some banks may even require a letter from the installer confirming that the panels have been installed correctly.

In short, there are many things that could affect the approval of a mortgage application.

Which are the best mortgage lenders for people who own a house with solar panels?

We recommend contacting a mortgage broker who specialises in helping clients with loans on properties with solar panels. A good mortgage broker should be able to help you find the right lender for your needs. For example, some, lenders such as Halifax Bank provides green living rewards for mortgage applications on houses with solar installed which means that borrowers can save up to £1,000 per year.

Can I remortgage to raise funds to install solar panels?

Yes, there are not many restrictions when it comes to remortgaging. You can remortgage any time you like. However, we do advise that you seek professional advice first. This way, you can make sure that you are making the most out of the opportunity.

Can I save on energy bills by installing solar on my property?

This depends on what solar panel installations you choose. If you go for a photovoltaic (PV) panel system, then you will be saving money every month. However, if you opt for a thermal solar system, then you will only see savings during the summer months.

What is Solar Panel Lease?

A solar panel lease is an agreement between the property owner and the installer. The owner agrees to pay a monthly fee for the installation of the panels. At the end of the contract period, the owner has the option to either continue paying or cancel the contract.

If you decide to cancel the contract, then the installer will remove the panels and return them to the manufacturer. Alternatively, you can leave the panels in place but the owner must bear all costs associated with maintenance and repairs.

If you decide to keep the panels, then you will be responsible for the cost of maintaining the system. In addition, you will also be liable for any damage caused to the panels.

You can read this guide on how to lease solar panels here.