The UK’s first dedicated mortgage for modular construction homes has been launched by Ecology Building Society.

The sustainable lender’s has partnered with modular manufacturers as part of an approach to secure lending on the modular panels before they arrive on site, ensuring mortgage finance is available for different types of self-builders.

Ecology’s “off-site build” products will enhance its range of green mortgages for self and custom-build clients, in a drive to encourage the construction of the most energy efficient homes to help meet the UK’s net zero ambitions.

Off-site construction utilises panellised units which are manufactured off-site in a factory and then assembled on-site to create an energy-efficient home. Ecology stated that the modular approach has benefits including quicker construction times, improved build quality and the opportunity to use more sustainable building materials as well as reductions in construction waste.

“Decarbonising our homes is key to meeting our net-zero ambitions,” said Ecology chief executive, Gareth Griffiths. “Now, more than ever, it’s important that lenders play an active role in incentivising green building and helping to reduce energy bills.

“We’ve been leading the way on sustainable mortgages for over 40 years, and we’re really pleased to be working in partnership with off-site manufacturers, who have a track record of delivering sustainable homes. We hope that our new mortgages will help scale-up modern methods of construction to deliver more homes built to higher energy-efficiency standards.”

The lender has initially teamed up with four modular manufacturers to offer the off-site build mortgages to their customers only, although the society said it expects to partner with more suppliers in the coming months.

Ecology will offer borrowers a choice of two products, an arrears payment option, and for the first time, an advanced payment mortgage, which may be of particular interest to those who require upfront finance to fund the purchase of land and manufacture of the modular panels.

“The introduction of the ‘advanced payment’ mortgage option is an exciting first for Ecology, making energy efficient off-site build homes more accessible for those borrowers who may require up-front funding,” Griffiths added.

“Our innovative approach, to secure our lending, in advance, on the modular panels while they are in the factory, has the potential to be a game-changer, helping to realise the environmental benefits of off-site construction, which will be critical in the fight against climate change.”

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