Homeowners will be paid up to £1,000 through the Eko cashback mortgage if they increase their energy rating by 10 SAP points.
This is the equivalent of insulating a hot water cylinder, installing low energy lighting or putting in solar panels or loft insulation.
The change will need to be evidenced on the property’s Energy Performance Certificate (EPC).
Any borrower can apply for the mortgage, which starts at a rate of 3.04 per cent at 75 per cent loan to value.
The mortgage also comes with free valuations and free legal advice on remortgages.
Mark Arnold, chief executive officer at Kensington Mortgages (pictured), said: “Many people are becoming increasingly conscious of their carbon footprint and want to reduce it.
“So making energy efficiency improvements in your home is a no-brainer – you can help combat climate change and save on your bills at the same time.
“With Kensington’s new Eko mortgage you can also be rewarded in the form of cashback. We are particularly excited about this new product because unlike other green initiatives, it is targeted at efficiency improvements to pre-existing properties, rather than focusing on investment in new builds, offering the opportunity to help combat climate change to a much broader set of borrowers.”
Kevin Roberts, director at Legal & General Mortgage Club, added that it was a positive step that would help to increase choice for consumers interested in green mortgage products.
“Like all industries, the housing and mortgage markets must react to the threat of climate change and the importance of reducing carbon emissions,” he said.
“Renovating existing housing stock is a crucial part of this mission and that means incentivising consumers who want to improve the energy efficiency of older homes.”