What are green home loans?

Just like standard home loans, green home loans allow you to borrow money to buy a property. But they also aim to reward borrowers for choosing to live more sustainably.

Some mortgage lenders offer green home loans with competitive interest rates to incentivise borrowers who choose to buy properties that meet certain energy efficiency criteria, lessening their household’s environmental impact.

Some of these lenders use the Nationwide House Energy Rating Scheme (NatHERS) to measure a home’s energy efficiency. If the home you are looking to buy meets a minimum star rating as specified by the lender, you may be eligible for their green home loan product.

Green home loans are also available to those who are looking to build a new home that meets certain sustainability standards, or refinance to renovate an existing home to improve these standards.

The types of features that can help improve energy efficiency and qualify your home for a green home loan include:

• Rooftop solar panels
• Battery storage systems
• Solar hot water systems
• Double glazing
• Rainwater tanks
• Grey water treatment systems
• Wind turbines
• Insulation
• 5+ star gas or electric heating
• Non-toxic building materials

If you are looking to build a new property with the help of a green home loan, the NatHERS website offers free energy-efficient house design downloads showcasing the use of sustainable design principles and construction techniques for a number of climate zones throughout Australia. The plans can also be helpful to those renovating existing properties as they contain useful information on how to improve the energy efficiency of your home.

What do green home loans offer?

Green home loans tend to offer many of the same features as other home loans, such as offset accounts and redraw facilities, but may come with lower rates and/or fees to reward borrowers for making eco-conscious decisions. This can make your mortgage repayments more affordable and help offset the upfront cost of installing or purchasing these energy-efficient upgrades.

You might also find that living in an energy-efficient home could save you money over the long term, as your power bills will likely be lower as a result. Plus, you’ll be doing your part for the environment by reducing your ecological footprint.

Are there any government incentives for green home owners?

Now no longer offered, the Green Loans scheme was set up by the Australian Government to encourage Australian households to tackle climate change and reduce their greenhouse emissions by installing solar products and devices to save energy and water. The Government offered households a free sustainability assessment and report as well as interest free loans to help implement the changes outlined in the report.

While this scheme has now finished, there are other federal and state rebates currently available, such as for the purchase and installation of rooftop solar and battery storage. 

RateCity’s solar personal loans hub has more detailed information on the rebates available to residents of specific states and territories, or you can search for federal and state government rebates on the Australian Government’s energy rebates webpage.

To see which home loan lenders offer green home loans and to compare your options, visit RateCity’s green home loan hub.

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