Start-up bank Perenna will grant funding received by the UK government to refine and launch its Perenna Retrofit Mortgage product to market. The product aims to solve the biggest barriers to decarbonising UK properties and encourage homeowners to make energy efficiency improvements to their homes. 

The project is funded by the Net Zero Innovation Portfolio (NZIP) under the Department for Energy Security & Net Zero as part of the department’s Green Home Finance Accelerator (GHFA). The GHFA was established to support the design and development of green finance products that incentivise domestic energy efficiency and low-carbon heating retrofit. 

According to the UK Green Building Council, nearly every existing property in the UK will need some sort of retrofit, which is equivalent to 29 million homes. The Climate Change Committee estimates that an investment of about £250bn will be needed to fully decarbonise homes by 2050.

Unlike other green mortgages, the Perenna Retrofit Mortgage will focus on homes that need to be upgraded, rather than homes which are already energy efficient. Perenna will offer consumers all the benefits of its flexible long-term fixed rate mortgage, launched in Q4 2023, with the additional benefits of a green rate discount, being rewarded for lowering energy usage. Customers who complete a qualifying retrofit will see their mortgage rate switched to a lower rate and will benefit from lower monthly payments for the rest of their term.

Perenna’s ‘Green Discount’

Perenna’s ‘Green Discount’ will be a significant incentive for homeowners to retrofit. For some customers with larger mortgages, it could save them over £60 per month, £720 per year, and £21,600 over 30 years. Combining the mortgage savings and the energy bill savings will make the business case for home retrofits more attractive to more homeowners.

The mortgage will also offer a data-driven, digital approach to energy assessment, with installation and savings verification through a home energy management system (HEMS) from Heatio. Once the product is live, Energy Systems Catapult will conduct qualitative and quantitative research on the consumer experience of the proposition at key touchpoints. The project will last for 12 months, with the consortium planning to launch its pilot in summer 2024.