For many Australians, being environmentally conscious is more significant than ever. In response to the changing times, green home loans have been introduced into the Australian market to give people more options for reducing their carbon footprint.
What is a green home loan?
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What can green home loans be used for?
While each institution has different rules for its product offerings, the general purpose of a green home loan is to use the money on projects that the lender deems to be green. This could include making environmentally friendly upgrades to your current residence and investing in devices that enhance sustainability.
How do green loans compare against other loans?
In most cases, green loans are available to customers at highly competitive rates to encourage purchasing new products that make homes more environmentally friendly, sustainable, and efficient. Compared to the vast majority of secured and unsecured loans, green loans usually have the lowest interest rate.
Who is eligible for a green home loan?
Along with using a green home loan for environmentally friendly reasons, there are some other critical eligibility criteria that you should be aware of.
- Verifying your income, current loans, credit history, and if you have filed for bankruptcy.
- Supplying your prospective lender with your personal details needed to apply for the loan. This can include proof of employment, current assets and debts.
- Providing the lender with the exact details on what the loan will be used for.
- After considering these factors, the lender will decide whether you are approved and what interest rate and other conditions that will apply to your loan.
What green loans are available on our lender panel?
The Commonwealth Bank Green Loan is a 10-year fixed and comparison rate loan of 0.99% p.a. for eligible customers with current Commonwealth home or investment loans. There are no establishment, monthly service, or early repayment fees, and the minimum loan size is $5,000 while the maximum loan size is $20,000. The Green Loan can be used to purchase small-scale renewables such as solar panels, battery packs, and electric vehicle charging stations if used at the property tied to the existing home loan.
CBA has also recently provided Australia’s first build-to-rent green loan for ‘Indi Sydney City’, a 130-million-dollar residential project that will be the first to be carbon neutral and be classified as a five-star green star building.
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Online only lender Firstmac offers a full-service green home loan for properties that are less than 12 months old and have a minimum NatHERS star rating^ of 7.0. Most borrowers can expect to receive a 2.34% p.a. (2.63% p.a. comparison rate*) variable rate and choose to borrow between $50,000 to $2,000,000 with a LVR of 80% to 90%. After the first five years, the Firstmac Green Loan rate increases 0.40%. As a bonus, this loan is equipped with a free offset account.
^ – The Nationwide House Energy Rating Scheme (NatHERS) is the most popular evaluation method of the National Construction Code (NCC).
- The possibility of lower interest rates
- Potentially higher LVR that allows for a lower deposit amount
- Reduced environmental footprint
- Limited lender availability
- Lending criteria can be stricter
Take advantage of lenders cutting their home loan rates! Speak to one of our home loan experts to compare hundreds of products across 25 lenders, and find the option that’s right for you!