What are green home loans? - Mortgage DomayneSkip to main content

What are green home loans?

March 2, 2024

A lot of mixed messages in the media this week, all of which can make for confusing reading.

On the one hand, market research firm Roy Morgan revealed that 1.609 million households were at risk of mortgage stress in January, a rise from August and September’s figure of 1.56 million. Meanwhile, on the same day, NewsCorp publications were tipping a flood of activity in the property market this year resulting in property values increasing by 15%. It seems to me that the research data is at odds with the prediction of huge value upgrades, but the Australian property market does move in mysterious ways.

Irrespective, inflation remained flat in January at a two-year low, helped by falling prices for meat and seafood, stoking hopes the Reserve Bank may bring forward interest rate cuts. which will help ease the financial pressure on a lot of Australians.

In this week’s newsletter, we look at green home loans which are gaining prominence as more lenders add them to their product suite.

Green loans are increasingly popular among individuals considering home renovations, construction, or purchases. These loans offer a practical way to finance environmentally conscious projects, alongside the potential for lower interest rates. They are seen as beneficial for homeowners, promoting investment in energy-efficient homes tailored to Australian conditions. With growing awareness of climate change, green loans have emerged as a viable option to reduce carbon footprints and save on energy costs.

What exactly is a green loan?

A green loan is designed to fund eco-friendly and sustainable projects, catering to those seeking to enhance energy efficiency in their homes or integrate sustainability features. These loans typically come with perks like reduced interest rates and flexible terms, encouraging eco-conscious decisions.

Advantages and disadvantages of green home loans

Advantages:

  • Financial benefits: Green loans offer lower interest rates and financial incentives, resulting in long-term cost savings.
  • Access to incentives: Borrowers often gain access to government incentives, such as rebates and tax credits.

Disadvantages:

  • Initial expenses: While green loans lead to eventual savings, homeowners may encounter higher upfront costs for eco-friendly installations.
  • Eligibility challenges: Meeting the criteria for green loans, particularly concerning property energy efficiency ratings, can be daunting.
  • Limited lender options: Not all financial institutions provide green loans, limiting borrowers’ choices.

Who qualifies for a green loan?

Eligibility criteria vary among lenders, focusing primarily on property energy efficiency and sustainability. Common requirements include:

  • Meeting minimum energy efficiency ratings, like a 7-Star NatHERS or a 7-Star Residential Efficiency Scorecard rating.
  • Installing energy-efficient features such as solar panels, insulation, and double-glazed windows.
  • Adhering to sustainable building practices.

Lenders assess properties based on these factors to ensure compliance with eco-friendly standards.

Variable

The rates below are based on a $500,000 loan, with the borrower making principle and interest payments with a loan term of 30 years. The rates quoted may vary depending on the borrowers LVR.

1 Year Fixed

The rates below are based on a $500,000 loan, with the borrower making principle and interest payments with a loan term of 30 years. The rates quoted may vary depending on the borrowers LVR. At the end of the three year fixed period, the borrowers interest rate will revert to a standard variable rate for the life of the loan.

Make an enquiry

Please enable JavaScript in your browser to complete this form.

Testimonials

So, what is it our customers love about us?

  • People first

    We put our customers at the centre of everything we do. Everything is geared around you.

  • Making it easy

    We'll take care of everything so you can focus on what's important.

  • Experienced brokers

    With years of experience, our brokers will answer all your questions. Simple.

  • We're in it together

    From the first chat right through the life of the loan, we're here for you.

  • Great rates

    With access to a huge range of loans and lenders, our brokers will make sure you secure a great rate.

  • Tailored solutions

    We'll sit down and discuss your specific needs. Your loan will be tailored specifically to you.

Give us a call

Our highly experienced brokers are here to help to you. Call anytime for a no-obligation chat.

Call 1300 366 296

Book an appointment

Our highly experienced brokers are here to help to you. Call anytime for a no-obligation chat.

Book an appointment