From loft insulation to lower interest rates: How energy efficiency really pays off
Homeowners could cut up to £2,000 a year from their energy bills this Energy Savers Week, by combining targeted home improvements with simple efficiency changes and, in doing so, they could improve their mortgage affordability by qualifying for a green mortgage – further boosting the savings on offer from taking a greener approach to homeownership.
Energy Savers Week is a national campaign led by the Energy Saving Trust, designed to encourage households to reduce energy use, lower costs, and improve efficiency through both practical upgrades and everyday behaviour.
To mark the campaign, award-winning mortgage adviser, Alexander Hall, has analysed a range of both long-term and quick-win energy-saving home improvements, highlighting their impact on household energy bills and how improved efficiency can support mortgage affordability by unlocking access to green mortgage product benefits.
Seven home improvements that make for substantial long-term savings
Alexander Hall has highlighted seven home improvements that can provide a substantial saving in the long term, with improved energy efficiency not only reducing household bills but also supporting mortgage affordability and eligibility for green mortgage incentives.
Cavity wall insulation delivers the largest single saving, cutting bills by an average of £470 per year. Installing loft insulation follows closely, saving around £260 annually, while upgrading to a more efficient boiler and installing solar panels both reduce energy costs by approximately £270 per year.
A smart thermostat can lower bills by around £175 annually, while double glazing delivers a more modest saving of £140 per year. Energy-efficient LED lighting, although lower impact individually, can still save around £90 a year when installed throughout a home.
Combined, these improvements could see the average household save an estimated £1,675 per year on their energy bill.
Which upgrades pay for themselves the fastest?
However, these improvements do require an upfront cost in order to implement, which in some cases can be substantial, meaning that the time taken to recoup this cost based on the annual energy bill saving varies.
The quickest win for those looking to boost their energy efficiency and lower their annual bill comes from installing a smart thermostat. With an average total cost of £225 and annual savings of £175, homeowners typically recoup the cost in just 1.3 years. Energy-efficient LED bulbs follow closely, paying for themselves in around 1.5 years based on a £135 installation cost and £90 annual saving.
Loft insulation offers one of the strongest balances between cost and return, with an average installation cost of £944 and annual savings of £260, meaning the investment is typically recovered in 3.6 years. Cavity wall insulation, despite a higher upfront cost of £2,195, delivers such strong savings that it pays for itself in just 4.7 years.
Boiler upgrades and solar panels are longer-term investments. A new boiler costs around £3,000 and takes approximately 11 years to recover its cost through savings, while solar panels, with an average cost of £6,100, typically take just over 22 years to break even.
Double glazing delivers the slowest payback. While it improves comfort and efficiency, an average installation cost of £3,750 and annual savings of £140 mean it can take close to 27 years to fully recoup the cost through energy bill savings alone.
Quick wins to cut your energy bill
Alongside these more extensive home improvements, the Energy Saving Trust also highlights that simple, low-cost changes can save households a further £350 a year. Actions such as draught-proofing doors and windows, reducing tumble dryer use, switching appliances off standby, shortening showers, and being more mindful with everyday energy use all contribute to meaningful savings without major expense.
So all in all, homebuyers taking a proactive approach this Energy Savers Week could see the annual cost of their energy bill reduced by just over £2,000.
Energy efficiency can also boost mortgage affordability
Improving a property’s energy efficiency doesn’t just reduce bills, it can also unlock mortgage benefits through green mortgages.
These products reward homeowners who buy or live in energy-efficient homes, typically with EPC ratings of A or B, with incentives such as lower interest rates or cashback.
In fact, there are now close to 50 lenders driving product innovation by offering green-related mortgage products for both green-existing and green-improving properties.
Notable examples are Leeds Building Society who offer an enhanced borrowing capacity for customers buying energy efficient homes on the basis they are cheaper to run, or Lloyds Green Living Reward which has now rewarded over £1m in cashbacks to homeowners for energy efficient improvements.
Richard Merrett, Managing Director of Alexander Hall and Chair of the Green Mortgage Advice Initiative, commented:
“Energy Savers Week helps to highlight how even relatively small changes can add up to meaningful savings over time and, whilst some of the more extensive home improvements may take longer to pay for themselves, they all make for worthwhile investments in the long-term.
What many homeowners don’t realise is that improving a property’s energy efficiency can also have a positive impact on mortgage affordability. With green mortgages now more widely available, lenders are increasingly rewarding energy-efficient homes with incentives such as enhanced borrowing capacity, lower interest rates or cashback.
This means homeowners can benefit twice over, reducing their ongoing energy bills while also improving the cost and flexibility of their mortgage.”
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