Find and compare green home loans

A typical home loan or mortgage is for borrowing money to purchase a property to live in as an owner occupier, or to rent out as an investor. A green home loan is a mortgage that’s specifically for borrowers buying an energy efficient property, which can help to lessen your household’s environmental footprint. Many Australian mortgage lenders who provide green loans do so with the support of the Clean Energy Finance Corporation (CEFC).

Green home loans (sometimes called clean energy home loans or sustainable home loans) are intended to help encourage Australians to invest in more sustainable housing, as residential buildings contribute significantly to Australia’s greenhouse gas emissions, thanks to heating, air conditioning, appliances, hot water systems and so on.

Green home loans are a lot like other mortgages, and may offer features and benefits such as an offset account and a redraw facility that can help you manage your loan repayments.

However, green home loans often offer interest rate discounts, lower upfront or ongoing fees, or extra features and benefits compared to everyday home loans, which may mean more affordable monthly repayments. 

However, you’ll need to use the green home loan to buy, build or renovate a property with features that can help improve energy efficiency, such as:

• Solar panels
• Solar hot water
• Double glazing
• Water tanks
• Grey water treatment systems
• Battery power
• Wind power
• Micro hydro system
• Insulation
• 5+ star gas or electric heating
• Non-toxic building materials

Additionally, some lenders attempt to operate in an environmentally-conscious manner, such as by running carbon-neutral offices, steering clear of investments in fossil fuels, or committing to plant trees for every home loan settled. Finding a lender whose values align with your own may be a factor when choosing a home loan.

Green home loans may be an option worth considering if you’re in the market to invest in energy-efficient homes, build a new home with environmentally friendly features, or renovate your property to add green alternatives for improved sustainability. The incentives these loans offer could help to offset any extra costs that may be involved when adding green features.

Some lenders base their green home loans on Nationwide House Energy Rating Scheme (NatHERS) home energy star ratings. If your property has more than the minimum number of stars under the NatHERS rating scheme (e.g. 7+) you may be able to qualify for a green home loan with certain lenders.

Some green loans function like construction loans, where rather than receiving the loan principal as one lump sum at the start of the loan term, you can draw down the balance in stages as construction progresses on the property, including the addition of green features.

Even if you already own a property, you may be able to benefit from a green home loan if you refinance. By refinancing onto a green home loan, you may be able to use the equity in your property to increase your loan amount to help pay for the installation of green technologies. Keep in mind that even with a lower rate and more incentives, increasing your loan principal can make your mortgage take longer to pay off, potentially costing you more in total interest charges.

Even if you don’t yet fulfil the lending criteria for a green loan, you may still be able to benefit from cashbacks and rebates from the state and federal governments for adding energy-efficient technology to your home. Depending on where you and your property are located, this could help to offset any extra costs involved.

Consider your financial situation and personal goals before you enquire about a green home loan or any other mortgage offer. A mortgage broker may be able to help you work out whether a green home loan will best suit your financial needs when buying your dream home.

A green personal loan may offer a viable alternative to a green home loan if you’re looking to add energy-efficient technology to your home, such as solar panels and batteries. These loans can help to keep your finances separate, so you can manage your home loan separately to your green renovation projects.

Green car loans can be used to purchase energy-efficient vehicles, including electric and hybrid models, and in some cases fuel-efficient petrol vehicles.