What is a Green Home Loan and how do I get one?
6 min read
The climate crisis and housing affordability are two of the biggest challenges facing Australians. So, how can we tackle both issues at once? Green Home Loans.
What is a Green Home Loan?
Green Home Loans are designed to reward home buyers and upgraders for reducing their environmental footprint by offering lower interest rates. In some cases, these specialised mortgages may also offer reduced fees, cash-back rebates and additional funding for energy efficient home upgrades.
The property sector is responsible for nearly a quarter of Australia’s total greenhouse gas emissions, so Green upgrades and construction is critical in fighting the climate crisis. But we all know going Green can be hard on the hip pocket, especially when you are already trying to save the deposit for your home. Additionally, some of the technology required to improve your Green credentials is very expensive and, in the past, difficult to source.
So, kudos to lenders that are getting behind this and other ethical banking initiatives to incentivise home buyers to take the greener path while working harder to earn your business.
What is a Green home?
A new Green home starts with an energy-efficient design aimed at reducing the household’s carbon emissions. Existing homes can also be deemed Green if they meet emission targets.
Green home features may include:
- Solar panels
- Home batteries
- Electric vehicle charging
- Window double glazing
- Hot water heat pump or solar hot water systems
- Upgraded Insulation
- Passive heating and cooling
- Smart lighting
- Wastewater treatment
- Energy monitoring systems
- Energy efficient appliances
Investing in these products and upgrades may require you to spend more initially but they are well worth it in the long run. Not only are you lowering your impact on the environment, but your commitment will pay you back with healthier home conditions and lower energy bills, as well as increasing the appeal and value of your home for resale.
For you and for the planet, this all points to a win-win.
Do I qualify for a Green Home Loan?
Each lender’s Green Loan package will have different eligibility criteria, so it’s best to chat with a broker about what the requirements are and how you can ensure your new home meets them. However it’s safe to say that you future home will need have one or more of these certifications:
- 7+ stars NatHERS rating
- A 7+ star Residential Efficiency Scorecard
- A Passive House Certification.
- Green Star Rating
What is a NatHERS rating?
The Nationwide House Energy Rating AScheme (NatHERS) provides a star rating to a home based on its energy efficiency. It is determined by measuring the home’s overall thermal performance by looking at design and materials as key factors.
The system works on a rating of 1 – 10 and the higher the rating, the more environmentally friendly the home is! Most Green Home loans will require at least a 7+ star NathERS rating to qualify.
Which banks are offering Green Home loans?
A growing number of lenders are offering Green Home Loans to help support those who want to invest in efficient, sustainable and healthy homes.
Current available offerings include:
- CommBank’s Green Home Offer:
- Firstmac’s Green Basic Variable
- Bank Australia’s Clean Energy Packages
We’re ready to guide you through the options, as each lender’s eligibility criteria will be different.
What other Green finance loans are available?
Are you looking to make a Green choice but don’t need a home loan? There are a variety of other Green finance products available to invest in and do your bit!
This includes car loans for efficient vehicles such as Electric Vehicles (EVs) and hybrids.There are also personal loans on offer to fund eco upgrades and products such as home batteries, double glazing, solar panels and off-grid systems.
However, before you commit to a purchase, it is wise to check with the particular lender you plan on using. As these lending products are so new it’s good to see if the specific product you are investing in qualifies under their criteria as a Green star product.
For more information regarding Green Home Loans or to have a discussion with our friendly team of brokers