| Lender | Home Loan | Interest Rate | Comparison Rate* | Monthly Repayment | Repayment type | Rate Type | Offset | Redraw | Ongoing Fees | Upfront Fees | Max LVR | Lump Sum Repayment | Additional Repayments | Split Loan Option | Tags | Features | Link | Compare | Promoted Product | Disclosure |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
5.99% p.a. | 6.51% p.a. | $2,995 | Principal & Interest | Variable | $0 | $530 | 90% |
| Disclosure | |||||||||||
5.84% p.a. | 5.89% p.a. | $2,947 | Principal & Interest | Variable | $0 | $500 | 60% | |||||||||||||
5.88% p.a. | 6.38% p.a. | $2,959 | Principal & Interest | Variable | $350 | $0 | 90% | |||||||||||||
5.94% p.a. | 5.99% p.a. | $2,978 | Principal & Interest | Variable | $null | $null | 80% | |||||||||||||
6.14% p.a. | 6.85% p.a. | $3,043 | Principal & Interest | Variable | $0 | $720 | 90% | |||||||||||||
6.15% p.a. | 6.43% p.a. | $3,046 | Principal & Interest | Variable | $299 | $0 | 80% | |||||||||||||
6.19% p.a. | 6.58% p.a. | $3,059 | Principal & Interest | Variable | $0 | $530 | 90% | 90% LVR |
| Disclosure |
In this page:
- What are green home loans?
- Is my home eligible for a green mortgage?
- Which lenders offer green home loans?
- What home improvements can help secure a green home loan?
What are green home loans?
Green home loans, sometimes known as eco-friendly or sustainable home loans, are financial products designed to incentivise environmentally responsible housing choices.
These loans typically offer lower rates to homeowners who own or are buying a home that meets certain energy-efficiency metrics, thereby reducing its owner's carbon footprint.
Many green home loans can also be used to fund the construction or renovation of energy-efficient, environmentally friendly homes.
What are green home loans for?
Green home loans are designed to support eco-friendly homeownership by offering financing options for properties that incorporate sustainable materials or technology. These loans primarily aim to foster energy efficiency and promote lower environmental impact. Here’s how green home loans align with key sustainability principles:
Sustainable practices
Green home loans are designed to finance properties that are built or upgraded with a focus on sustainability, using eco-friendly materials and minimising environmental impact. By supporting eco-friendly building methods, green loans encourage homeowners to contribute to a more sustainable future.
Loan incentives
Many lenders offer financial benefits for green home loans, including reduced interest rates or discounts on loan fees. These incentives can make the transition to sustainable living more affordable, helping homeowners lower both their financial and environmental costs.
Energy efficiency
Homes financed through green loans often emphasise energy efficiency, incorporating features such as solar panels, efficient insulation, and eco-friendly appliances. These upgrades reduce energy consumption, leading to lower utility bills and long-term savings.
Carbon footprint reduction
By financing homes that use less energy and fewer resources, green home loans contribute to reducing a lender’s overall carbon footprint. Homes that meet green standards help decrease greenhouse gas emissions, making a positive impact on the environment.
Pros and cons of green home loans
Pros:
- Lower interest rates and fees - Many lenders provide financial perks like discounted interest rates or waived fees to green home loan borrowers, making these products more cost-effective over time.
- Reduced energy costs - Energy-efficient upgrades funded by green home loans typically result in lower utility expenses, saving homeowners money in the long run.
- Increased property value - Eco-friendly homes often have higher resale values as they appeal to buyers interested in sustainable properties.
- Positive environmental impact - By reducing resource usage and emissions, homes that qualify for green home loans often align with sustainable practices, which are beneficial for both homeowners and the planet.
Cons:
- Eligibility requirements - Green home loans usually come with strict eligibility criteria, often requiring specific energy ratings or eco-certifications that may limit qualifying properties.
- Initial investment costs - Some green upgrades, such as solar panels or specialised insulation, can be costly upfront, even if they provide savings over time.
- Limited lender options - Fewer lenders offer green home loans than do traditional home loans, which may limit borrowers’ choices.
How do green home loans differ?
Green home loans usually come with features that can help borrowers carry out environmentally-friendly improvements in their homes. Here are some of the most common features of a green home loan:
-
Discounted or lower interest rate
Perhaps the most attractive feature of a typical green home loan is its interest rate. These products generally offer lower rates to borrowers with sustainable homes, or those who invest in energy-efficient home improvements. Such improvements can include adding solar panels, environmentally-friendly insulation, energy-efficient heating and cooling systems, and double-glazed windows. -
Flexible repayment terms
Many green home loans offer greater flexibility when it comes to repayment terms than traditional mortgages. Such flexibility can help ease the financial burden associated with making eco-friendly upgrades. Some green home loans can even take the place of a construction home loan, drip feeding the funds needed to build or renovate a property and thereby saving a borrower interest. -
Eligibility tests
Unlike a typical home loan borrower, a person taking out a green home loan will need to prove their property is eligible. This might mean making a certain number of sustainable upgrades or securing certification from an approved organisation.
Is my home eligible for a green mortgage?
To qualify for green home loans, borrowers must own or buy a home that meets certain qualifications or implement a specific number of sustainable upgrades.
Exact requirements will differ from lender to lender but the certifications that can qualify a home for a sustainable mortgage are commonly provided by either the Nationwide House Energy Rating Scheme (NatHERS) or the Green Building Council of Australia.
NatHERS
NatHERS rates a building's eco-friendliness out of ten stars, with those rated seven stars or higher generally eligible for a green home loan.
Many states in Australia demand new homes boast a NatHERS rating of seven stars or higher, so if you own or are building a new home, you might qualify by default.
Green Star
The Green Building Council of Australia can also certify that a home is sustainable with its Green Star Homes Certification.
Fewer lenders accept this certification than do a NatHERS star rating. CommBank is among those that will consider a home's Green Star rating.
Sustainable home improvements
Certain lenders might also consider a home eligible for a green mortgage if a specific number of 'sustainable' improvements have made within a set timeframe.
Which lenders offer green home loans?
Plenty of financial institutions offer green home loans. Here are a few that do, and you can find more by perusing the table above:
-
CommBank
CommBank's Green Home Offer provides borrowers with a discounted standard variable rate loan when they build, buy, or renovate their home to be more sustainable, climate resilient, and energy efficient.
-
NAB
NAB offers lower interest rates and discounted Lenders Mortgage Insurance (LMI) to eligible 'sustainable' home loan customers.
-
loans.com.au
loans.com.au's Green Home Loan is available for homes that are less than 12 months old and have a NatHERS rating of seven stars or more. The discount is available for the first five years of the loan. The lender also offers discounted interest rates for homes with solar panels.
-
Bank Australia
Bank Australia offers three green home loan products, offering with different interest rates for homes that are more sustainable than others. Its lowest rate green home loan requires a home to have a 7.5-star NatHERS rating and solar panels, while the highest rate green home loan is available to borrowers who have made at least three sustainable home improvements within the last 12 months.
What home improvements can help secure a green home loan?
There are plenty of home improvements that can help save homeowners money, whether that's by reducing the size of their power bill or making them eligible for a green home loan. Such improvements include adding:
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Insulation
-
Energy-efficient appliances
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Double-glazed windows
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High-efficiency heating and cooling systems
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Water-saving fixtures
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Smart home technology
Frequently Asked Questions
Answers to some of the most frequently asked questions about Green Home Loans.
To qualify, you typically need to buy or upgrade a property that meets specific environmental standards, such as energy efficiency certifications or a minimum rating from programs like NatHERS. Requirements vary by lender, so check their specific criteria.
You can verify this by checking if the property has energy efficiency ratings or certifications, such as a high NatHERS score or eco-friendly features like solar panels or water-saving systems. Lenders often provide a list of qualifying standards.
No, green home loans can be used for both new builds and existing properties, as long as they meet the required sustainability criteria or have eco-friendly upgrades.
Typically, you’ll need proof of income, identification, and property details. Additionally, you may need documents that verify the property's energy efficiency, like an energy rating certificate.
Deposit requirements vary by lender, but a typical deposit is around 10-20% of the property value. Some lenders may offer flexible terms if the property meets higher green standards.
The Nationwide House Energy Rating Scheme (NatHERS) is an Australian rating system that evaluates a home’s energy efficiency based on its design. A high NatHERS score indicates better energy efficiency.
Eligibility usually extends to those purchasing, refinancing, or upgrading homes that meet specific energy efficiency or sustainability criteria. Individual requirements vary by lender.
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