Green loans save money, too
Special deals are available for households that want to do their bit for the environment
Going green doesn’t have to cost you the earth. There are bank “green loans” designed to offer more favourable terms if you want a household that is more environmentally friendly.
You can borrow as much as $30,000, depending on your bank and your borrowing capacity, to have a fully kittedout green home. That means installing a solar panel system with battery packs, rainwater tanks and even a grey wastewater system, taking your gas, water and electricity bills down to a fraction of where they could be.
The appeal of going off the grid has gone up as electricity prices rise and the spectre of tight water restrictions faces us during bushfire season. More people are also working from home or living in remote areas, making sustainable living an easier choice.
Check the requirements
One in four households have installed solar panels, making Australia one of the leading countries for the uptake of the technology. But if you are going to borrow funds to install a system or replace an existing one, make sure the bank has included your prospective installation company on its pre-approved list. This can vary between the loan providers and your application could be rejected if you don’t check approved solar retailers.
For some households with panels installed, buying battery packs to retain their excess power makes more sense than selling it back to the grid, but batteries are not cheap. They can typically cost between $5000 and $10,000, or more, depending on your household needs. Research shows that you can save around $600 a year using battery packs so it could take you a long time to recoup your outlay. Before you apply for a green loan, make sure you have assessed the real cost benefits and adjust your expectations accordingly.
Compare interest rates
Generally, green loans fall under the personal loans category and can be secured, against an asset, usually your home, or unsecured, which attracts a higher interest rate. As a rule of thumb, expect interest rates to range between 3% and 8%, depending on your lender and your preferred loan terms.
There is such a wide margin, so it pays to do your homework.
An exception rather than the rule, Commonwealth Bank’s CommBank Green Loan offers a low interest rate. Existing customers can get a fixed 0.99%pa based on a 10-year loan ranging from $5000 to $20,000.
In addition to the low rate, there are no establishment or monthly service fees and no penalty for early repayment.
You should include these features in your checklist because not all loan providers do this. For example, non-bank lender Brighte requires a $299 establishment fee and a $1.50 weekly account-keeping fee. The upside, however, is that Brighte specialises in green loans and can offer its product to a broader market, while Commonwealth Bank has a stringent set of criteria so not everyone is eligible for its low rates.
Incentives for electric car
Bank First offers a lower interest rate of 5.56%pa (as at the time of writing) on loans for hybrid cars or cars that have lower emissions for their size, with a build date of the current year or previous calendar year. This contrasts with the higher 8.12%pa comparison rate offered for anyone applying for the “used car loan”.
Check with your bank if the car you want to buy qualifies for a green loan.
There are other savings outside lower interest payments depending on which state you live in. For example, since September 1 this year, the NSW government has waived stamp duty on battery and hydrogen fuel cell cars priced under $78,000 and offered $3000 rebates for the first 25,000 private purchases of EVs under $68,750.
Whether it’s solar hot water or solar air-conditioning, you don’t have to pay standard interest if you want a more energy-efficient household. There could be a green loan to suit your taste and budget.