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Green loans – kind to the planet and your wallet

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Eco-friendly and budget-friendly are phrases that are rarely used together when it comes to real estate.

But that’s changing fast with an enormous push to bring green homes to the masses.

Cheaper technology and building designs are delivering affordable eco homes that can slash and even eliminate power bills. Some solar-powered properties are actually earning their owners thousands selling electricity back to the grid.

Weigh that against those of us who’ve spent a fortune to warm and cool our houses while working from home, and you can see why energy efficiency is shaping up as one of the must-haves for new properties.

And now finance – the final piece of the puzzle – is falling into place, with the launch of discounted rate green home loans to reward buyers who buy, build or renovate to prioritise sustainability.

What is a green home loan?

It’s finance that aims to encourage borrowers to build or buy environmentally-friendly homes, usually through discounted interest rates. There are cashback offers available too for refinancing a limited range of eligible properties – contact me for details.

Green loans can also be used to retrofit existing homes with more energy efficient upgrades such as better insulation, solar panels, double-glazing or a battery to store solar power.

To qualify for green finance, houses must meet specific eco-friendly benchmarks – generally at least 7 stars out of a possible 10 on the Nationwide House Energy Rating Scheme (NatHERS). The scheme ranks the thermal performance of properties, with the maximum score of 10 stars indicating a house will not require any heating or cooling to maintain a comfortable indoor temperature year-round. Most States require new homes to reach a minimum 6-star rating, which is fair but not outstanding.

As a guide, one study by Sustainability Victoria found houses built before 1990 averaged only 1.6 stars, while those constructed from 1990-2005 were 3.1.

Why offer incentives?

The property sector accounts for about 23 per cent of Australia’s greenhouse gas emissions, according to the Australian Sustainable Built Environment Council (ASBEC). And about half of those emissions come from residential properties, mainly through electricity used for heating, cooling and powering hot water systems.

Australia’s Clean Energy Finance Corporation (CEFC) has provided funding for the lending and construction industry to encourage investment in more energy efficient housing. Developers around the country are getting on board, offering high-spec sustainable house-and-land packages at comparable prices to standard builds.

How do the costs of an eco-home stack up?

Apart from feeling good about doing your part, sustainable homes can now offer price advantages in three areas:

  • Lower mortgage rates: Discounted interest rates – some limited to an initial five-year period – can shave a significant amount from monthly repayments.
  • Lower running costs: In the past 18 months many of us have spent a lot of time at home and gained a pretty good idea of just how thermally efficient (or inefficient!) our homes are. A study led by Curtin University1 found average savings on electricity bills of around $1,750 a year for families in energy-efficient housing.
  • Higher and faster resale: We all look at star ratings before buying appliances. Homes should be no different. High star-rated homes can fetch a 10 per cent premium and sell about two weeks faster than standard homes, according to a 2018 study by PRDNationwide.

The real equation is how do the additional costs associated with building sustainably compare to the savings? Again, according to research from Curtin Uni, a net zero home – one that produces more electricity than it uses – only need cost $20,000 (or 6-11 per cent) more than a standard comparable home. It’s a price difference researchers estimated annual energy savings should claw back within ten years.

Want to find out how going green could stack up for you? Get in touch to discuss the range of green loans on the market.


Retired Brisbane mathematician David says the stars aligned when, within the space of a few weeks last year, he heard about new green loans, saw his dream block of land up for sale and inherited some money.

It all came to fruition in April this year when he moved into his newly-completed, 8.7 star-rated energy efficient home in the Brisbane suburb of Sherwood, where he is living the green dream. Not only has David not had a power bill since he moved in, but he has also been earning about $200 a month selling electricity back into the grid from an enormous 20 kW rooftop solar system.

“It’s a lovely house and it’s performing very well,” David says of the net-zero three-bedroom home. “I went through all of winter and I didn’t use any heating.” And last month, when Brisbane had a record-breaking 36.6-degree day, he didn’t even turn on a fan, with his house remaining a warm but comfortable 26 degrees.

A life-long environmentalist, David says he was motivated by sustainability rather than savings when he approached several banks last year looking for a discounted green loan to construct an architect-designed eco-house. Although he considers his build expensive at well over $600,000, this could have been substantially reduced by using generic design plans and reducing some technology specs, he says.

“I hope a lot of people read this and think, hey that would suit me, because the more people that build energy efficient houses, the less we’ll need to make electricity and the more we can make it on our own roofs,” he says.

David’s tip: Do your research on green loan criteria before purchasing land, as he had eligibility issues with one bank over the block he had already purchased.

1 Dr Josh Byrne, Dr Christine Eon & Dr Andrew Law, Mainstreaming Net Zero Energy Housing – cost benefit analysis, Co-operative Research Centre for Low Carbon Living, 24 June 2019.

Any advice contained in this article is of a general nature only and does not take into account the objectives, financial situation or needs of any particular person. Therefore, before making any decision, you should consider the appropriateness of the advice with regard to those matters. Information in this article is correct as of the date of publication and is subject to change.