Mortgages and Solar Panels

Solar panels are a great addition to your home, helping you save money on your energy bills as well as reducing your carbon footprint. 

They are eco-friendly power solutions, however, they do come with a few issues which can cause you problems when applying for a mortgage.

Our expert team of advisors can help you when it comes to mortgaging properties with solar panels.

How does buying a house with existing solar panels affect the mortgage?

Having a house with solar panels is a great way to help the environment, as well as reducing your own carbon footprint and electricity bills. However, they can be very expensive to install. 

In the UK, there are schemes such as “Rent a Roof” available; however, many people opt to fund solar panels with a loan. 

Others often choose to lease their systems to reduce installation costs, but this is typically where the most common mortgage problems occur. 

Buying a house with leased or rented solar panels

One of the main factors determining whether you'll experience issues getting a mortgage is whether the solar panels are leased or rented by the previous owner. 

The lender must be happy with the lease agreement, as the terms within the lease will transfer to you, the property buyer. 

For example, solar panel leases can include contractual agreements stating that the property owner is responsible for the repairs. 

Can you buy out a solar lease?

Yes, sometimes leases do contain a “Buy-out clause” which means that the new owner can buy their way out of the lease. The buy-out premium is usually the cost of the installation, which is around £10-15k, plus a premium.

If your solicitor confirms that the property may be difficult to mortgage, you can arrange for the buy out to be completed prior to completion. 

Most solar leasing companies do include a buy-out period and price in their agreement, however it’s important to remember that might not always be the case. 

Typically, a buy-out is allowed after 5-7 years of the lease. 

Buying a house with owned solar panels

Buying a house with fully owned solar panels is the best scenario. 

In virtually all cases, the Feed-in-Tariff agreements will transfer to the new owner and they will take on a Smart Export Guarantee contract signed by the previous owner. 

Once the house sale has been completed, all maintenance costs will also transfer to the new owner.

Can solar panels prevent me from getting a mortgage?

Whether you can get a mortgage or not all depends on if the solar panels are leased or owned. 

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 lease agreement in place, you will be able to apply for a mortgage as normal.

Do solar panels devalue your house or property?

Generally, installing solar panels on your home does make a little, positive difference to how much your house is worth and shouldn’t devalue it. It may only be worth £1,000-2,000 more though. 

The amount of increase will depend on several factors, such as:

  • The current value of your house;

  • Its size and location, and;

  • Whether you have any additional green installations, such as an electric vehicle charge point. 

The value of the solar panels should be reflected in the asking price.

Are mortgage lenders okay with solar panels on properties?

Installing solar panels is unlikely to have an effect on your mortgage repayments, but your mortgage lender will mainly be interested in ensuring that you can repay your loan. 

If not, they will establish whether or not it is possible to repossess your property to sell it and recover any debt owed to the lender. 

What you need to check before buying a house with solar panels

If you’ve found your dream house and it has solar panels, don’t be put off buying it as there will be a mortgage out there for you. 

There are a few considerations you should look into before you do proceed:

  • Were the panels installed with a rent-to-roof scheme? This means they are commercially leased as part of their home.

  • Do the panels have a Microgeneration Certification Scheme (MCS) accreditation? This is used to certify, provide quality assurance and provide consumer protection.

  • Does the current property owner own the solar panels themselves?

  • Are there any current financial agreements on the solar panels?

How to get a mortgage on a house with solar panels

At Go2Mortgage, our advisors have years of experience for a range of mortgage issues which aren’t always classed as simple. 

If you're currently viewing a house which has solar panels and you’re unsure about the next steps, contact us today.

FAQs about solar panels and mortgages

Can you sell your house if you have solar panels?

Yes, you can sell your house if you have solar panels - you have two options. 

  • Pay off the lease: Buying out the remainder of your lease means you own the solar energy system before you actually sell your home. This allows you to sell the system as part of the house and request a higher selling price

  • Transfer the lease to the new homeowners: This allows you to transfer the lease agreement to the new homeowner, under their name. Many buyers are willing to take over a lease. 

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