Reduce your mortgage by 3 years 3 months, for free?
The MCS Foundation Charity exists to “define and maintain the Standards for low-carbon energy technology products, contractors and their installations. This includes heat pumps, solar, biomass, small wind and battery storage.” MCS Certification is an important accreditation for ECO4 installers.
New data from the Foundation makes a strong financial case for mandatory renewable energy measures in all new builds. They have found a standard 3 bedroom house in the UK can expect to save £1341 a year through adequate insulation and the use of an air source heat pump, powered (at least in part) but a solar panel system.
Does £1341 sound like a big amount to you? How about £46,612? That is the average over the life of your standard 25 year mortgage.
Anyone remember the 13th cheque? It’s an old policy that gave employees a bonus 13th monthly pay at the end of the year, essentially as an end of year bonus. With the average UK mortgage costing £1300-1400 p/m, let’s view your potential energy saving in those terms and see what happens.
Instead of spending it on Christmas gifts or similar though, what do you think £46,612 would mean to your mortgage? Let’s make that real for you:
The average value of a house in the UK is £287,546. With a 25% mortgage, you have borrowed £215,659. Let’s assume a 5.98% interest rate, which is very common currently, you would pay £269,812 in interest over 25 years.
Here’s where this gets really cool… put your £1300 in savings each year into your mortgage each month, and you would pay £63,117 less interest.
If you keep paying your monthly fee of £1300-1400 (don’t let the bank reduce it!), plus the extra £108 p/m (£1300 a year) you can actually reduce the duration of your loan by 3 years and 3 months, and save £63,117 in interest payments.
Most households need to invest £30-40k to receive the £63k saving. For households who qualify for ECO4, this really should be one of the easiest decisions you have ever made. For anyone reading this thinking it’s not at all that straightforward for you, that’s why we are here to help you. Our role is make sure you understand and are walked through the process of applying for funding. It’s not to offer financial advice though, so please be responsible and use this information to do your own research.
For more information, or just to have a chat as a starting point, call us on.