How to get a mortgage with leased solar panels on your roof
Solar panels can be a great way to save money on your electricity bill. They have also steadily increased in popularity as people look for more sustainable and eco-friendly power options. Therefore, it can also cause problems when applying for a mortgage.
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How does buying a house that has solar panels installed affect your mortgage?
Although solar panels can be a great way to protect the environment and save money on electricity bills, they can also be quite expensive. This is usually where mortgage problems arise.
There are many subsidies and programs like “Rent a Roof” in the UK, but many people choose to finance the purchase of solar panels using a loan.
Some people lease their installed solar panels to save money on installation; This is the most common problem with mortgages.
Leasing solar panels instead of buying a house with owned panels
It is essential to determine if the previous homeowner rented or owned the installed solar panels. This will affect your chances of getting a mortgage.
Before you purchase, you need to confirm that the solar panels will be included in the sale. They might be able to be installed in the new house if the previous owners purchased them. This is also allowed or stipulated in many lease agreements.
If the solar panels stay put, then you’ll be confronted with one of these scenarios:
The solar panels are a result of previous residents who paid for them.
It is desirable for a seller not to have paid for the panels upfront and to leave them at their property.
The difficulty involved in removing and reinstalling solar panels. Many mortgage companies require that you pay for property damage caused by the removal of solar panels.
You are unlikely to have any problems applying for a loan, depending on your circumstances. This is a mortgage that includes solar panels.
You should make sure that your panels have MCS accreditation. Also, find out how old the solar panel provider is and do some research on the solar panel company.
Purchase of a home equipped with “rented” or leased solar panels
It’s not as simple if the house is leased or “rented”; this is where mortgage applications can become complicated with mortgage lenders. Leasing solar panels can be a problem for some mortgage lenders, while others may not lend to properties with them.
Mortgage providers will be more confident if the lease terms stipulate that all financial responsibility is passed to the new owners. Lenders will need to consider additional legal issues if the previous owners have not paid off the lease.
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What mortgage lenders will approve solar panel properties?
Many mainstream mortgage providers have adjusted their terms to accommodate this situation, provided you meet the remaining eligibility criteria. Accord, Nationwide, and Halifax approve mortgage applications for solar-powered properties.
However, each lender has its lending criteria based upon your other circumstances.
FAQs
Is there a different rule for solar panel mortgages in some parts of the UK than in others?
The UK is not the fastest country to install solar panels. You will, however, find solar panels more prevalent in some areas than others. For example, purchasing a house in Scotland with solar panels is much less common than in London.
Can I remortgage my property with solar panels?
It all depends on your situation. There are fewer risks if the panels are purchased outright. However, renting them can be tricky, depending on the lease agreement.
Can I get a remortgage for solar panels?
This may be an option for those who are remortgaging to buy the panels fully. If you lease the solar panels, include upkeep in your calculations. Also, be aware of the potential consequences.
Can solar panels stop me from getting a mortgage?
Many UK homeowners could get expensive solar panels installed for free thanks to a government initiative. This scheme was popular because it lowered homeowners’ carbon footprint and electricity bills.
This has created uncertainty in the mortgage market as media reports have reported that mortgage lenders refuse to lend to properties with leasehold solar panel roofs.
What does this mean for you? You may be looking to refinance a house with solar panels or get a mortgage for a property with solar panels.
Some mortgage lenders won’t lend to applicants for houses with leased solar panels. If the solar panels are outright purchased, and there is no lease or loan agreement, then you can apply for a mortgage as usual.
Why are leased solar panels a problem to mortgage lenders?
Solar power can be expensive; many homeowners opt to lease or borrow the money. The solar panel providers usually lease your roof space and offer free installation.
This could cause problems later on when trying to sell your house or remortgage. Some lenders may require consent before any lease agreement can be entered into.
You may find that the buyer is not willing to assume the lease agreement and all the financial consequences.
Are you able to get a mortgage for a house with solar panels already installed?
A solar panel lease might not be acceptable for a mortgage lender.
Two scenarios are possible.
1: The property vendor has purchased the SOLAR panels OUTRIGHT. There is no outstanding lease or finance.
If the homeowner owns the panels, likely, you will not have any difficulties applying for a mortgage.
If the house’s seller can provide proof that insurance can be obtained to cover solar panels, you can apply for a mortgage like you would normally.
You could also ask the seller to remove the solar panels and repair the roof as part of the sale price. To allow the seller to finance the removal, negotiate a lower price for such cases.
2. The panels are owned and leased by the solar panel company.
These are the most common problems that mortgage applicants may face. Lenders will scrutinise the details of the contract, finance agreement, and lease terms much more closely.
Some lenders will allow you to get a mortgage for a house with solar panel roofs, provided the roof space is leased. However, there are certain caveats.
The lender must be satisfied with the lease agreement as it will transfer to property buyers.
One example of a contractual term in solar panel leases is that the property owner may be responsible for repairs.
Do solar panels devalue your house or property?
It all depends on when the panels were installed. If the panels were installed over a decade ago, you might be able to show potential buyers your energy savings over that period.
Research suggests that solar panels do not add significant value to a property’s price but are seen by buyers as an attractive addition to their purchase.
It will all depend on the buyers’ perceptions of solar panels. Many people dislike how solar panels look from the top of their roofs.
Can you purchase a solar lease?
You can buy out solar panel leases, but you must talk with the owner or installation company.
If you decide to purchase the lease, you will be the owner of the panels.
After you have paid any outstanding lease or finance, you can either remove the panels or keep them as part of your property sale.
Lease agreements can come with high late repayment fees, just like mortgages.
It might be worth looking into the possibility of passing the lease on to the new property buyer, provided they have a mortgage that allows this.
What is the cost of removing solar panels?
Removing solar panels can cost between £500 and £1,500 if you own them.
However, this estimate does not include the cost of replacing any roof parts.
Speak to a specialist in non-standard properties today
If you follow the appropriate steps, adding solar panels to a home you want to purchase with a mortgage will not stop you from making the purchase. We can help.
A house with solar panels or leasehold solar panels can still have a mortgage.
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