As a nation, Australia is shifting towards a “greener” future and part of this is the introduction of the green home loan by lenders. This cultural change and shift towards ecologically friendly living is also influencing the way people make financial decisions. A recent study by Ernst & Young found that when it comes to how Australians view sustainability:
- 71% believe brands have a responsibility to make a positive change in the world.
- 76% say that sustainability is either “very”, “extremely” or “somewhat” important to them when making a purchase decision.
With this in mind, it’s no wonder that a growing number of Aussies are expressing interest in green home loans. But what is a green home loan? How can a green mortgage benefit both the environment and the homeowner? And what options are there for green home loans Australia and its residents can take advantage of?
What is a Green Home Loan?
A green home loan is a type of mortgage that supports environmentally sustainable practices. These loans offer incentives to encourage borrowers to invest in environmentally friendly features for their homes. A green mortgage may offer energy-efficient upgrades or carbon offset programs, in addition to lowered interest rates and flexible repayment terms. In this way, they foster a more eco-conscious approach to home ownership in Australia.
What Are the Benefits of Green Home Loans?
Green home loans in Australia offer a range of benefits to eco-minded homeowners. These include:
- Financial incentives, such as discounted interest rates or fee waivers.
- A reduction in overall energy consumption (leading to reduced energy bills).
- Minimising a homeowner’s environmental footprint.
- Potential for increased resale value.
- Support for renewable energy initiatives.
- Improved water sustainability (due to investment in rainwater harvesting systems and water-efficient fixtures).
- Eligibility for relevant government incentives and rebates.
Green mortgages offer homeowners a great range of financial benefits while also helping them to adopt an eco-friendlier lifestyle.
What Options Are Available for Green Home Loans in Australia?
Australia’s first green mortgage was launched in 2020. Established by Bank Australia with the support of the Clean Energy Finance Corporation, that scheme was so popular that it doubled the expected uptake within the first year. Today, multiple lenders are offering green home loans in Australia. These include:
- Some of the Big Four Banks (Commonwealth Bank, NAB and ANZ)
- Smaller regional banks (Bank Australia, RACQ Bank, Regional Australia Bank and Gateway Bank)
- Independent lenders (Firstmac)
To find out more about which lenders offer green home loans in Australia, talk to a mortgage broker.
What Are the Eligibility Criteria for a Green Mortgage?
Lending criteria will always vary but in general, the house you plan to buy/build will need at least one of the following to qualify for this type of loan:
- Nationwide House Energy Rating Scheme (NatHERS) rating of 7 stars or higher.
- Passive House Certification.
- Residential Efficiency Scorecard with a rating of 7 stars or more.
- Green Star – Design & As Built score of at least 8 points on the ‘Greenhouse Gas Emissions’ credit.
Building A Sustainable Future with a Green Home Loan
Let’s consider a hypothetical example of how this kind of loan could benefit a prospective homeowner:
Charlie lives on the Sunshine Coast and is committed to building an eco-friendly home. Charlie consults with an experienced mortgage broker, who identifies a lender offering a suitable green home loan. They submit an application outlining how the borrowed funds will be used to build a home with a NatHERS rating of at least 8 stars (which makes it eligible for this particular loan type). The lender, recognising Charlie’s commitment to sustainability, approves the loan and provides favourable terms, including a reduced interest rate.
By choosing a green mortgage, Charlie is able to build a home that is environmentally responsible, boasts long-term energy savings and has increased property value.
Talk to a Broker About Green Home Loans in Australia
To find out more about how a green mortgage could help you achieve your home ownership dreams in a more eco-conscious way, talk to the team at Sunshine Coast Financial Solutions. We’ll happily answer all your questions, explain the various options available and help you identify which green home loan will be the best choice to suit your needs.
Meet Chris Wilson, the heart of Sunshine Coast Financial Solutions (SCFS). With over a decade of experience in finance, Chris started his journey as a broker with Aussie Home Loans in 2009. His dedication earned him the title of Rookie of the Year in 2010. By 2011, he was ready to build a business based on trust and strong partnerships.
