Green Loans - Low/No Interest
Your Guide to Green Home Loans
With the aim of reducing carbon footprints and saving money on energy bills, many banks have introduced Green Home Loans.
Green Home Loans provide homeowners with the opportunity to finance energy-efficient or eco-friendly home improvements on a reduced interest rate. In this article, we will explore the various options available through the 5 main banks.
Understanding Your Green Home Loan Options
When it comes to Green Home Loans, most of the major banks are offering these as a “top-up” to your existing home loan.
These top-ups allow you to borrow additional funds on top of your existing mortgage for the purpose of making sustainable improvements to your home.
Let's delve deeper into what each bank is offering:
ASB's "Better Homes" Home Loan - Up to $80,000 at 1% interest over 3 years.
ASB offers the "Better Homes" top-up home loan, featuring a low-interest rate of 1% for loans of up to $80,000 over three years.
This loan can be used for various sustainability improvements, including heating, insulation, solar panels, double glazing, and electric vehicles.
If you repay all or part of an existing ASB Better Homes Top Up, you may be eligible to apply for additional ASB Better Homes Top Ups, as long as the outstanding total balance of existing and new loans does not exceed $80,000.
ANZ's "Good Energy" Home Loan - Up to $80,000 at 1% interest over 3 years.
ANZ provides the "Good Energy" home loan, offering a low-interest rate of 1% for up to $80,000 over three years.
This loan is specifically designed to finance energy-efficient upgrades under 4 different categories.
The first is energy efficient upgrades to your home such as heating, ventilation and insulation.
The second pertains to clean transportation upgrades such as purchasing electric or hybrid vehicles, electric bikes and electric vehicle chargers.
The third is renewable energy upgrades such as solar panels and solar batteries and the last being sustainable water upgrades such as rainwater tanks.
You can apply for more than one ANZ Good Energy Home Loan, provided the total amount doesn’t exceed $80,000. This means you’ll be able to purchase a range of ANZ Good Energy Upgrades that suit your needs. Minimum equity of 20% is required for clean transportation upgrades.
BNZ's "Green Home Loan" Top Up - Up to $80,000 at 1% interest over 3 years.
BNZ offers a "Green Home" top-up loan, allowing homeowners to borrow up to $80,000 at a low-interest rate of 1% for the first three years.
The loan can be used for sustainability improvements, including insulation, solar panels, rainwater tanks, and financing electric or hybrid vehicles, electric bikes and electric chargers.
If you don’t already have a home loan with BNZ, you must apply for a BNZ home loan and the BNZ Green Home Loan top-up together to qualify and have a minimum 20% equity.
Kiwibank's "Sustainable Energy" Home Loan - Up to 10 years PLUS cash contribution on floating rate.
Kiwibank provides a "Sustainable Energy" home loan. The maximum will be determined by their affordability criteria and is on the floating interest rate.
For loans over $5,000, they offer a cash contribution of up to $2,000 towards your sustainable energy system's cost over four years: $800 after the first year and $400 annually for the subsequent three years.
It covers a slightly broader range of sustainable energy systems such as solar power, small-scale hydro, wind energy and geothermal resources.
The minimum loan term is 7 years and the maximum loan term is 10 years. If you switch your home loan to Kiwibank and need additional lending to buy an eligible sustainable energy system, part of your loan will count as the sustainable energy loan and their contributions will be added to that.
If you’re building a new house that has a sustainable energy system included in the cost of the property, part of your loan will count as the sustainable energy loan and KiwiBanks contributions will be added to that as well.
Westpac's "Greater Choices" Home Loan - Up to $50,000 at 0% interest over 5 years.
Westpac offers the "Greater Choices" home loan, which allows borrowers to access up to $50,000 with no interest for up to five years.
The loan can be used for a range of sustainable enhancements to your home, including solar panels, insulation, ventilation, heat pumps, and double glazing to help create a warmer, drier and more energy efficient home.
It’s also available to be used for energy efficient transport like an EV, hybrid vehicle or electric vehicle charger.
You must have a minimum of 20% equity in your home or 35% if it's a rental property and the loan is available for new or current customers. The beauty is you can take out more than one Greater Choices home loan provided you don't exceed the $50,000 overall limit - so one for the EV and one for the house!
Quick Tips!
Before you pick up the phone, it's best to do a HomeFit self assessment test for tips on improving the health of your home.
Developed by the New Zealand Green Building Council, this is a simple tool that produces a final report to help you prioritise the options for making your home warmer, drier and more efficient.
Plan Repayments and Avoid Debt Traps
While a Green Home Loan may offer attractive terms initially, it's important to understand the long-term cost implications.
By working with a Mortgage Adviser you can evaluate the total cost of financing, including the interest rates that will apply once the interest-free period or low rate ends.
This will help you make an informed decision and avoid any surprises down the line.
It's also important to note that each bank has its own criteria and requirements for these Green Home Loans, therefore, it's best to talk to a Mortgage Adviser beforehand to compare the options before choosing a lender that best suits your needs.
Feel free to reach out to see which option is right for you!
