Quick guide to green loans

Green loans are a type of finance designed to encourage environmentally friendly choices. They can help homeowners and property investors fund energy-efficient upgrades – while potentially benefiting from lower interest rates and special lending terms.

These loans are offered by a growing number of lenders who want to support sustainable living. While the features vary between institutions, green loans are typically used to purchase and install eco-friendly systems such as:

• solar panels
• battery storage
• energy-efficient heating and cooling
• insulation
• water-saving appliances

In some cases, green loans are structured as separate personal loans with discounted rates. In others, they may be bundled with a home loan package or offered as a top-up to an existing mortgage. The key requirement is that the funds must be used specifically for approved green upgrades – and documentation is usually required to verify installation and compliance.

Green loans can be an attractive option for homeowners and investors who want to reduce their long-term energy bills and environmental footprint. Some lenders also provide green home loans for properties that meet certain environmental standards – such as a minimum NatHERS rating or a seven-star energy efficiency rating – giving eligible buyers access to lower rates or fees on their home loan.

It’s important to note that eligibility criteria and approved products can differ significantly between lenders. What qualifies as a green upgrade with one lender may not be eligible with another. 

For homeowners and investors alike, green loans can provide a financial incentive to make sustainable improvements – creating homes that are not only cheaper to run, but also more attractive to tenants and future buyers.