The deal will be available from the 1 June, and borrowers can access between £5,000 and £15,000 up to a maximum of 90 per cent loan to value (LTV) on a two or five-year term.
The loan should be used for green home improvements such as solar panels, air source heat pump, window upgrades, boiler upgrades, cavity wall insulation, loft insulation and electric car charging point.
The deal will revert to the standard variable rate, which currently stands at around 7.74 per cent, when the term ends.
The loan is available via Nationwide’s mortgage advisers and brokers.
Effecting ‘positive change’
The lender said that around 16 per cent of the country’s emissions come from housing, and that housing was a crucial part of meeting the government’s net zero target by 2050.
It said that it had “limited ability to reduce emission on the properties it lends on” but by removing interest on the green additional borrowing deals it could “effect positive change by incentivising members to make green home improvements”.
For example, if a member borrowed the maximum £15,000 over a five-year term, the monthly payment on the existing green additional borrowing product at a rate of 3.89 per cent would be £275.50.
However, for those taking out the zero per cent deal, payment would reduce by £25.50 per month to £250, so the member would save £1,530 over the full term of the deal.
A Nationwide spokesperson said that as part of the application process advisers are required to determine the use of funds and whether borrowers are eligible for the products.
The total amount of the loan must be spent on energy efficiency improvement.
Shifting behaviour
Henry Jordan, director of home at Nationwide Building Society, said: “Residential properties are one of the biggest causes of emissions and there is a need for more to be done by government and business to encourage households to act.
“A key barrier to making homes more energy efficient is not only the upfront costs associated with retrofitting, but also the payback period of making such changes.”
He added: “It’s clear to us that only meaningful incentives will help shift behaviour. So, by launching this latest product for up to 5,000 of the society’s mortgage holders, we can test and understand whether offering zero per cent interest will encourage members to make the necessary green home improvements, where the costs of finance may have, until now, discouraged them.
“As a mutual, we’re committed to returning value back to our members, which is demonstrated by this being the first time we’ve taken this approach. Creating a greener society is a shared goal and we need to make it as easy as possible for households to play their part.”
