Go green to escape repayment pain: Green home loan savings
A green home loan could cut repayments by up to $5,040 a year
8 December 2022
- In the last 12 months, the number of green home loan products in the Mozo database has doubled, with 18 new products added, taking the total to 36
- The average green variable home loan rate is 5.35%, 8 basis points below the overall average variable rate of 5.45%
- The leading green home loan rate is 4.24% from Gateway Bank, 121 basis points below the overall average
- Green personal and car loans have also seen significant growth with 10 new products introduced in 2022
According to analysis from financial comparison site Mozo.com.au, Aussies with sustainable homes could be in a position to escape repayment pain with a leading green home loan rate offering savings of up to $5,040 a year.
The finding comes as Mozo’s database shows that the number of green home loan options has doubled in 2022, with 18 new products added, taking the total to 36.
“With so many Australians struggling with rising mortgage repayments this year, we need to draw more attention to green loans. Aussies with sustainable homes could be in a position to unlock savings they didn’t even know they were eligible for,” said Claire Frawley, Personal Finance Expert at Mozo.
According to the Mozo database, the average green variable home loan rate is 5.35%, 10 basis points below the overall average variable rate of 5.45%. While the leading green rate from Gateway Bank is 121 basis points below the average, at 4.24%.
“As the number of green home loans continues to grow, it is crucial for borrowers to shop around and compare interest rates as not all green home loans boast competitive rates.”
On a $600,000 mortgage, paying principal and interest over 25 years, going with the leading green rate instead of the average home loan rate could reduce monthly repayments by $420 or $5,040 a year.
“The criteria for green loans differs between providers but if borrowers have recently done environmental upgrades on their home, or are purchasing an existing home with sustainable features, it is worth getting in touch with a green lender to see if their home qualifies,” said Frawley.
Green home loan tips:
- Most green loans require a home to have a Nationwide House Energy Scheme (NatHERS) or Residential Efficiency Scorecard rating. If you don’t already have this, organise an accredited assessor to come to your property and provide a rating
- If your property did not score at least a 7-star rating, consider upgrading your property with environmental features like rain tanks and solar heating
- To help with financing environmental upgrades, consider taking advantage of discounted green personal loan
- Compare the green loan options available to make sure you are getting the best deal
Other green finance options:
- Other green products that have seen significant growth this year include personal loans and car loans, with ten new products entering the market in 2022, 5 in each category.
- The average variable green personal loan rate is 5.84%, 401 basis points below the overall average of 9.85%
- The leading green personal loan is Illawarra Credit Unions Green Eco Loan with rates going from 3.99%
- The average variable green car (new and used) loan rate is 5.42%, 212 basis points below the overall average of 7.54%
- The leading green car loan is Illawarra Credit Unions Green Car Loan with an interest rate of 3.99%