What is a ‘Green Home Loan’, and how do you get one?

What is a ‘Green Home Loan’, and how do you get one?

Welcome to 2023 - ‘Green is the new Black’ – everything is ‘Green’. 

  • Green technology
  • Green energy
  • Green construction
  • Green holidays
  • Green investing
  • Green broadband
  • Green vehicles
  • Green coal
  • You can even get a ‘Green Home Loan’

In this article, Maloney's Property sets out to explain what a ‘Green Home Loan’ is and how you get one.

Maloney’s Property has 30 years of experience in the Canberra property market, incontestably the ‘Greenest’ state or territory in Australia.

In fact, from October 2023, all new homes in the ACT will need to meet a minimum 7-star NatHERS rating (more on NatHERS below).

In this article, Maloney’s Property will define what a ‘Green Home Loan’ is, the available green home loans, and how to qualify for them.

What is a ‘Green Home Loan’?

Ok, so there is a significant market for borrowers who want to invest in energy-efficient and sustainable properties by offering home loan interest rates at a discount.

Some lenders also offer loans for ‘Green’ additions that can be paid off alongside traditional home loans.

Most lenders require you to achieve a particular star level under the Nationwide House Energy Rating Scheme (NatHERS).

Most banks and mortgage lenders in Australia offer ‘Green Home Loans’.

Some of the benefits of a Green Home Loan include:

  • Lower energy bills
  • Lower interest rates
  • Lower environmental footprint

Other benefits include:

  • Your property will be built with sustainable materials
  • It will consume less energy
  • It will emit fewer greenhouse gases
  • You will have more sunlight and ventilation
  • Increased energy rating translates to increased resale value

So how is this energy rating calculated?

NatHERS uses software to give you the expected indoor temperature for your dwelling.

It will take into account the following:

  • The size of your home
  • The specifications of your home
  • Building materials and products
  • The construction method
  • Where the dwelling is located

Based on this information, the software will give you a NatHERS rating.

The NatHERS system can take the data and then work out how much heating and cooling you would need over an entire year and then give you a star rating out of ten where:

  • 0 stars = the building does nothing to reduce hot and cold discomfort
  • 6 stars = the minimum standard
  • 10 stars = the building doesn’t require additional heating and cooling

Therefore, if you are looking for a sustainable home to optimise your chances of getting a ‘Green Home Loan’, you would probably need a potential investment property with a NatHERS of at least 7 to 10.

How to qualify for a Green Home Loan?

Banks and other mortgage lenders have different types of Green Home Loans and criteria. Below are some of the loan requirements:

1. Clean energy home loan

  • 7-star rating;
  • Property upgrade criteria – this allows for a discount of up to five years for a property with up to three of the following types of upgrades:
    • Electric vehicle charging points and electric vehicles
    • Hot water pump or solar hot water
    • 75% upgrade to led lights
    • Air-conditioning with a minimum energy rating of 4 stars
    • Pool pump with a minimum energy rating of 7

2. Sustainable Home Loan

  • Owner-occupier
  • Up to 30-year loan
  • Build or renovate
  • Pass minimum environmental standards
  • Include particular sustainable features such as:
  • Grey water treatment system
    • Wind turbine
    • Rainwater tank
    • Solar hot water
    • Grey water treatment system

3. Green loans

  • Smaller loans to help switch to solar at a low fixed rate for:
    • Solar panels
    • Battery packs
    • Heat pump hot water
    • Electric vehicle charging stations

How to get a 7-star NatHERS rating

Many tools are available to help you reach your NatHERS star rating goal, including the official website at https://www.nathers.gov.au/.

The website has been updated to include whole-of-home assessments and ratings to support the new National Construction Code energy efficiency requirements for residential buildings.

A very useful document on this site is the newsletter Top tips for building for 7 stars. It outlines the following significant areas to improve in your sustainable home:

  • Get your NatHERS assessor involved early
  • Orientation is key
  • Improve the glazing
  • Increase zoning
  • Insulate more
  • Plan for fans
  • Check the colours
  • Look at lighting

There you have it, Maloney’s Property’s quick run through Green Home Loans. 

If you are looking for an investment property in Canberra with a high NatHERS rating, then why not contact Maloney’s Property team to organise a meeting time.


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