Every UK mortgage lender and brokers should have a home retrofit planning tool available for borrowers.
Why? Well, mortgage companies have four main incentives to increase the uptake of home retrofits amongst their borrower customers:
- Unlock green lending. The success of green mortgages and refurbishment loans relies on homeowners upgrading their homes, because most UK homes cannot currently be classified as energy efficient and, therefore, ‘green’. If green mortgages take off, then lenders will also be able to increase their revenue through issuing certified green RMBS for investors.
- Support net zero plans. Mortgage lenders are already required to report on and reduce their environmental impact through climate-related financial disclosures, and the financed emissions that come from energy efficient homes in the property portfolio are a huge part of that. If lenders can persuade their borrower customers to retrofit homes it reduces financed emissions and supports progress towards their net zero transition plans.
- De-risk the mortgage portfolio. The poor energy efficiency of UK homes is a major factor in climate transition risk for lenders (as well as for other actors in the property sector). The more borrowers that make home retrofit improvements, the more this risk is mitigated within a lender’s existing mortgage portfolio.
- Increase asset value to decrease capital requirements. Increasing a home to an EPC C rating increases the property valuation by 12.5% on average and lowers the risk of the loan, which means that there are lower capital requirements for the lender – freeing up additional capital for further lending and revenue generation.
But studies have shown that there are currently two major barriers to homeowners retrofitting their homes: perceived upfront costs and simply knowing where to start.
Overcoming this means providing homeowners with accurate retrofit messaging on the best way to approach retrofitting their property in a cost effective and impactful way.
And the best way to achieve that is through providing a home retrofit planning tool alongside your green mortgage offering.
The good news is that there’s no need to build your own software because we’ve designed our Retrofit Explorer tool to overcome the key barriers to retrofit, and it’s available for lenders to white label for their customers.
Retrofit Explorer by Kamma
Kamma’s Retrofit Explorer home retrofit planning tool has been specifically designed to overcome the main barriers that currently prevent homeowners from pursuing a home retrofit, which is why lenders like Octopus Real Estate trust the tool to support their green mortgage offering.
Ensuring accurate retrofit recommendations through enhanced data
Many of the larger high street mortgage lenders already have their own home retrofit planning tool, like Co-operative Bank’s home improvement tool, Halifax’s home energy saving tool, and Lloyds Bank’s eco home tool.
However, these tools often give inaccurate recommendations because they rely on:
- EPC data which is well-known to be incomplete and unreliable
- Data inputs from the homeowner e.g. the age of the property, the heating system used, recent energy bill costs, and more, which most homeowners won’t have immediately to hand and so will either click away or give inaccurate information.
Retrofit Explorer is built using Kamma’s enhanced energy performance dataset and predictive modelling alongside EPC data to ensure that every home in the UK is covered to a high degree of accuracy without needing excessive inputs from the user – delivering a better user experience to increase completion rates.
A cost-optimised approach to ensure an in-budget retrofit plan
Home retrofit planning tools typically show the user all possible retrofit improvements, using a ‘whole house retrofit’ approach and a default budget of £10,000+.
This may be optimal for carbon savings, but it isn’t realistic for most homeowners.
Our research found that 75% of homeowners could budget only £2,500 for retrofit improvements initiall
A tool which shows them an extensive and expensive retrofit plan will only put homeowners off before they even get started – in fact, perceived high costs are the top barrier preventing homeowners from retrofitting currently.
Retrofit Explorer by Kamma is powered by a cost optimisation engine which combines a best practice approach to retrofit with cost effectiveness, showing the user the most impactful and affordable measures to make their home energy efficient.
The user is able to define their budget if they choose.
In extensive testing Retrofit Explorer’s retrofit recommendations have been found to reduce the cost of retrofit plan by a huge 67% on average compared to other available retrofit planning tools – whilst delivering the same energy efficiency improvements and energy bill savings.
The resulting plan is fully adjustable and editable, so the homeowner can add additional measures if they want to, but they always see the least overwhelming view of retrofit first.
Here, for example, we can see that installing a hot water cylinder jacket is actually very low cost and would have a much bigger impact on energy efficiency and EPC rating than a higher cost measure like improving double glazing:
Highlighting the ROI of retrofit
Because cost is such a barrier, homeowners need to be able to easily understand the benefits of home retrofit for the upfront costs to seem worth it – energy bill savings, improved comfort, increased property valuation, and reduced carbon emissions.
Retrofit Explorer places the upfront costs alongside the benefits in terms that homeowners can easily digest, making the ROI of retrofit clear.
Incorporating retrofit education along the way
Alongside upfront costs, homeowner understanding of retrofit measures is also a key barrier to making energy efficiency improvements.
Retrofit Explorer subtly incorporates education and advice throughout the customer journey, so that the homeowner can feel confident in the steps needed for their home.
Connecting with local installers for an end-to-end experience
Home retrofit planning tools often end at the point of receiving a home retrofit plan – failing to support homeowners to actually take action and leaving them still unsure of how to get started with energy efficiency upgrades.
Retrofit Explorer enables homeowners to immediately take the next step towards energy efficiency improvements by finding local installers who can deliver the retrofit improvements that have been suggested to them – and they get a downloadable PDF of the plan that they can supply straight to the installer too.
🏠 Get started with Retrofit Explorer
With Retrofit Explorer lenders can increase the uptake of retrofit amongst borrowers, reducing risk and driving the green mortgage market. It’s easy to connect with any existing website or app in line with your company’s branding.
Book a demo ➡️