Can solar panels prevent me from getting a mortgage?
In 2010, a government initiative led to many UK homeowners getting expensive solar panels fitted for free. Many people took advantage of this scheme as it helped them to reduce their environmental footprint and could lead to cheaper electricity bills.
However, this has led to a lot of uncertainty in the mortgage market, as there are media reports of mortgage lenders refusing to lend on properties with leasehold solar panels.
What does that mean for you? Whether looking to re-mortgage a home with solar panels, or wanting to apply for a mortgage on a property with solar panels installed?
Not all mortgage lenders will lend on mortgage applications for houses with leased solar panel agreements in place. However, if the solar panels were bought outright, and have no loan or lease agreement in place, you should be to apply for a mortgage as normal.
Why are leased solar panels a problem for mortgage lenders?
Solar panels are expensive, so many homeowners choose to enter into a lease or loan agreement. In most cases the solar panel company will lease the house’s roof space and install the panels for free.
This can provide complications further down the line when it comes to selling your home or re-mortgaging. Some lenders will have mortgage terms dictating that consent is required before any lease agreement is entered into.
You might also find that a buyer won’t be prepared to take over the lease agreement, and the financial implications involved.
If you are considering having solar panels, you should always contact your mortgage lender before doing so, to make sure that they will agree to this lease arrangement.
Can you get a mortgage on a home with pre-installed solar panels?
As a buyer, you might find that many mortgage lenders won’t be prepared to loan on a property with a solar panel lease in place.
There are two scenarios to consider here though:
1: The property seller has bought the panels and there is no outstanding lease or finance
This scenario where the home owner owns the panels out right, this typically means that you won’t have any problems in applying for a mortgage.
Providing the house seller can produce a warranty and evidence that you can get insurance to cover the solar panels, you will be able to apply for a mortgage as you normally would.
Another option as a buyer could be to ask the existing owner to have the solar panels removed and the roof repaired as part of their cost of sale. In cases such as this, you should negotiate a lower fee on the property price to allow the seller to finance the removal.
2. The solar panel company owns and leases the panels on the roof space
This is where mortgage application problems can occur, as many lenders will be looking at lot closer at the intricacies of the finance agreement, contract, and lease terms.
There are some lenders who will let you get a mortgage on a house with solar panels where the roof space is leased, but there will be some caveats.
In simple terms the lender will need to be happy with the lease agreement, as the terms in it will transfer to the property buyer.
Solar panel leases can include contractual terms stating that the property owner might be responsible for repairs being one example.
Who are the best mortgage lenders for houses with solar panels?
With an increase in solar panels across the UK (now over 1 million), many mortgage companies are now starting to adjust their terms to accommodate for this type of arrangement.
Our specialist advisers have access to a wide range of lenders prepared to accept solar panel home applications, including re-mortgages.
To find out if you can apply and what terms could be possible, please call us or complete an enquiry form so that we can arrange for an adviser to provide you with quick, no-obligation advice.
Can you sell your house if you have solar panels?
Yes, you can, but you might have a few issues to overcome before doing so.
For example, if you bought solar panels on finance or a secured loan, you will have to ensure that the panels are paid for before you sell.
Secured loans use your home as collateral on the loan, so you can’t sell to a new buyer before this financial agreement has been resolved.
Many solar companies also give new property buyers the option to buy the installation outright or take over the lease agreement when buying a house with panels in place.
If you are a buyer, you will need to inform your mortgage company.
Do solar panels devalue your house or property?
This can depend on how long ago the solar panels were installed. For example, if they were fitted over a decade ago, you could present your energy savings onto a potential buyer over that period.
However, there is research to suggest that solar panels don’t add a massive value onto a property price but are instead often viewed by purchasers as an attractive add-on to the purchase.
How buyers view solar panels though will be down to them. Many people don’t like the way they look on top of a roof space.
Can you buy out a solar lease?
Solar panels leases can be bought out, but it will be something you will need to discuss with the installation company or leased-panel owner.
If you do decide to buy the lease out, it means you are the owner of the solar panels.
Once you have settled any outstanding finance or lease, you could completely remove the panels, or keep them installed as part of the property sale.
However, lease agreements do tend to come with high early repayment fees, just like mortgages do.
You might want to explore the option of passing the lease onto the new property buyer, providing they can get a mortgage that allows for this scenario.
How much does it cost to remove solar panels?
If you do own your solar panels and want to remove them, then it can cost anywhere between £500 and £1,500 to have them removed.
This estimate though, won’t include the cost required to replace parts of your roof if needed.
How to get a mortgage on a house with solar panels
Don’t be put off by buying a property with solar panels. There will be a mortgage for you. However, there are just a couple more consideratons to look into before you do proceed including:
- Do the panels have the proper MCS accreditation?
- Were the panels installed under a rent-a-roof scheme (meaning they will be leased)?
- Does the existing property owner own the solar panels?
- Are there any existing financial agreements in place on the solar panels?
Once you know that, get in touch with us.
Our advisers have years of experience in finding suitable mortgages for a range of scenarios that don’t always fall into the category of “simple”.
The current high street lenders have varying approaches to what they will and won’t do with regards to solar panel mortgages.
If you call us today and tell us a little bit about your own concerns and challenges, whether that’s with buying a new home, or if looking to re-mortgage with a solar panel installation, we can match you up with the best adviser from our panel.