Reaction to Santander/Octopus eco-mortgage offer

Clearly homebuyers want to minimise their bills especially during a cost of living crisis so this seems like a good incentive to buy a new property providing you are not paying too much of a new build premium. The fact that buyers may be able to borrow up to £30,000 more will be helpful for some so they can purchase the property in the first place. The bigger lenders are doing more to help home owners to make energy efficient home improvements either through providing loans or lower mortgage rates for properties with higher energy performance certificate ratings.
This new energy tariff will no doubt be popular if people are buying an energy efficient new build because the idea of not having a gas and electric bill sounds very appealing. Like with any deal that sounds too good to be true, you need to read through the terms and conditions and make sure the mortgage and energy tariffs are the best for your circumstances. Parts of the new build property market are really struggling now.

Anything that reduces household energy costs and carbon emissions is a positive development. Giving buyers access to higher borrowing because their ongoing costs are lower also makes sense.

The financial detail is what matters though. Buyers should not just focus on the promise of zero energy bills. They also need to ask whether they are paying a premium for the property itself. If the purchase price is significantly higher, the savings on energy bills could be offset by the extra mortgage and interest over time.

This is not a reason to dismiss the scheme. For many buyers it could provide greater financial certainty, protection from future energy price rises and a more environmentally friendly home. The key is to compare the total cost of ownership against other properties, rather than looking at energy bills in isolation.

More innovation and more choice for buyers is always welcome, provided consumers understand exactly what they are paying for!

This is similar to the electric car thought process - you know it makes sense from a green perspective but are you happy to shell out and borrow more to get it?

I suspect there will not be a major uptake in this till there are enough homes built like this to gain some critical mass

There's an easy cynicism about launches like this, but the substance here is real. A handful of lenders have already begun reflecting lower running costs in what buyers can borrow, and Santander has taken that further by recognising a home with no energy bills at all. The fair challenge is the new-build premium, and buyers should always weigh it. The market, though, is already starting to reward efficiency on its own. Nationwide's latest analysis found homes rated A or B sell for around 1.6% more than an equivalent D-rated home, the least efficient sell for less, and the premium is over 12% in the rental sector. The extra borrowing, up to £29,000, won't transform affordability by itself, but at the margin it can decide whether a first-time buyer qualifies, and the principle will matter more over time. Credit to Santander for pushing this forward, and to Octopus and the housebuilders behind these homes.

The new build premium is real, but it exists outside this arrangement, so I don't think this is a gimmick. Yes, you tend to pay a bit more up front for a new build, but the real prize here isn't the extra borrowing, it's a home that costs almost nothing to run and protects the buyer from energy price rises for a decade.

I'd be honest with clients that an extra thirty grand or so won't transform what they can afford on its own, so it shouldn't be the only reason to buy. But treat the zero bills as the main event and the affordability boost as a useful bonus, and it starts to look like smart thinking rather than a marketing exercise.

I think it’s a sensible innovation rather than a gimmick, but the benefits shouldn’t be overstated. Most qualifying homes are new builds that already carry a price premium, so the extra borrowing may simply help bridge that gap rather than making buyers significantly better off. For those already planning to buy one of these homes, it’s a useful affordability boost thanks to lower running costs—but it’s not a reason on its own to stretch your budget.