Government financial support is making it possible for lenders to offer discounted and interest-free green loans.
The Clean Energy Finance Corporation (CEFC) – a federal government-owned ‘green bank – established the Household Energy Upgrades Fund (HEUF) to make $1 billion available to subsidise green loans, so borrowers can pay down energy efficiency upgrades at lower interest rates.
Plenti was the first lender to benefit from the CEFC initiative, allowing them to offer customers green loans up to $50,000 with low interest rates of between 2.74% and 3.34% per annum.
Westpac recently introduced a discounted green loan to help homeowners and investors implement energy-efficient upgrades to their properties. Eligible Westpac home loan customers can access a green loan of up to $50,000 at a 4.49% variable interest rate, payable over 10 years.
Here are a few other lenders offering green loans with competitive terms. This is by no means an exhaustive list as many other bank and non-bank lenders are offering low-cost green loans.
- CommBank offers green loans to their customers with a mortgage of at least $150,000. You can get a loan of between $5,000 to $30,000 with a variable interest rate of 3.99%. There are no loan establishment or monthly account fees.
- Community First Bank offers loans from $1,000 to $10,000 with a 6.54% variable interest rate with payment terms up to 10 years. Fees apply.
- Brighte offers NSW residents a no-interest payment plan for purchases up to $45,000, with repayment terms ranging from 6 months to 10 years
Interest-free loans have two benefits:
- You can choose a longer term to make repayments more affordable without having to worry about paying interest.
- Your monthly repayment won’t change as it’s not influenced by changes in the cash rate.
However, when choosing interest-free finance, consider upfront and ongoing fees, such as loan establishment and monthly account fees. If you’d like to put any extra cash towards paying off the loan faster, check if the lender charges a fee for early settlement.
Interest-free loans may sound appealing, but depending on the loan terms and conditions, they could end up costing you more than a standard green loan. The Energy Experts can help you crunch the numbers to find the smartest option for your needs.
What home upgrades does a green loan cover?
Most green loans include:
- solar panel installations
- home battery storage
- solar hot water systems
- hot water heat pumps
The benefits of making your home more energy-efficient
With rising energy prices, more Australians are switching to solar and other sustainable energy solutions to lower their electricity bills. A 2024 study by Westpac shows that nine out of ten Australians who want to renovate in the next five years would consider making a sustainable upgrade to their home.
Assistant Minister for Climate Change and Energy Jenny McAllister said the government established the Household Energy Upgrades Fund for this reason. “This fund will unlock cheaper finances for households to embrace home energy upgrades and unlock both comfort and savings,” McAllister said.
It can also help people with older homes that don’t meet today’s energy standards make property and appliance upgrades that can result in significant energy savings.
“More than seven million homes were built before national codes included energy performance standards,” said McAllister. “Just upgrading a house from a one-star rating to a three-star rating can reduce energy bills by 30%, and the Fund will help more than 110,000 households access lower-cost green loans to do just that”.
In addition, federal government rebate programs can help you recoup a portion of the costs of purchasing and installing a solar power and battery storage system. Most retailers offer feed-in tariff schemes that will pay you for any excess solar energy you feed back into the grid.
Another benefit is that energy-efficient upgrades can help you become more energy-independent. Using solar energy reduces dependence on the grid, which can be a lifesaver when unexpected power outages occur.
