RBA To Evaluate Increasingly Low Rates As Australian Property Market Soars To Unprecedented Heights

Building a home does not have to be at the expense of the environment. Homes, however, are one of the main contributors to greenhouse gasses. The average household in Australia is responsible for 7 tonnes of gas emissions every year.

Inefficient energy usage leads to more burning of fossil fuels, hence, more greenhouse gasses emissions. From heating, cooling, lighting, and appliances, homes consume energy all day. Because of this, Australian homes are responsible for 20% of the country’s total gas emissions.

There are many methods for reducing greenhouse emissions, one of which is being less dependent on the energy supplied by the grid. It can be achieved through a green home design and the use of energy-efficient home technologies.

The best part is, homeowners can get a green home loan for their energy-efficient homes. So, what is a green home loan and can anyone apply for it? Read on to find out.


Green Home Loan Defined


A green home loan is a product designed to encourage home buyers and builders to buy or build environmentally friendly structures. Borrowers usually get discounts and other benefits when their homes get certified as eco-friendly.

A green home loan can be used for the purchase or building of a new eco-friendly home. It can also be used for the renovation of an existing home to make it more eco-friendly and energy-efficient.

The Clean Energy Finance Corporation (CEFC) invested $60 million in 2020 to support green home loans. It then invested an additional $30 million due to a strong response from home borrowers.


What are the Benefits of a Green Home Loan?


Green home loans come with many benefits to encourage home builders and buyers to invest in sustainable homes. While the specific benefits can vary per bank, some benefits are common among different lenders. Here are some of them:

  • Discounts on home loan rates
  • Higher LVR of up to 95% 
  • Cashbacks from the local, state, and federal governments
  • Rebates
  • Additional funding 
  • Increased loan amounts compared to other home loan products

Of course, green home loans also have their disadvantages. These are:

  • They are available in a limited number of banks and lenders.
  • The lending criteria can be strict, depending on the lender.

Lenders can impose higher charges.


What are the Criteria for Getting a Green Home Loan?


While the qualifications in getting a green home loan may vary from lender to lender, the house must at least meet one of these:

  • The house must be certified with a 7-star or higher rating from NatHERS. 

NatHERS, or the Nationwide House Energy Rating Scheme. measures the energy efficiency of homes and gives them a star rating. The higher the rating, the more energy-efficient the home is. That means that the house can run on less energy for both heating and cooling and yet still be comfortable. 

The evaluation is based on the house plans and building specifications. NatHERS then measures how much energy the home needs for heating and cooling. The rating is based on the structure, design, and materials used on the structure.

  • The house must qualify for a Passive House Certification.

It is the Australian Passive House Association (APHA) that issues a Passive House Certification. Before issuing the certificate, APHA evaluates the house design based on the following: Airtightness, Indoor Air Quality, Occupants Comfort, Annual Space Cooling/Dehumidification Demand, Annual Space Heating Demand, and Annual Primary Energy Demand.

A passive house can have up to 90% of energy savings compared with regular home structures. In addition, passive certified homes have excellent insulation, great ventilation, and are comfortable. The certification can apply to both new and existing structures.

  • The house must have a Residential Efficiency Scorecard of at least 7.

The Residential Efficiency Scorecard is a program that gives homes energy star ratings. The energy star rating shows how much energy a household consumes. Government-approved assessors perform the assessment and ratings of homes.

The scorecard assessment provides ratings from 1 to 10. The higher the scorecard rating, the more energy-efficient the house is. A scorecard assessment aims to help households by suggesting home upgrades that can improve energy usage and efficiency. The assessor also provides suggestions on how the household can reduce its energy costs.

  • The house must have a Green Star, Design, and As Built score of at least 8 points in the Greenhouse Gas Emissions credit.

The Green Star Design & As Built assesses the design and construction of homes based on nine categories. These categories include management, indoor environment quality, energy, transport, water, material, land use and ecology, emissions, and innovation. Under each category are credits, and the Greenhouse Gas Emissions category falls under Energy.

During the design stage, homeowners can submit their home designs for a Design Review Certification. Although it is optional, homeowners can receive feedback on further improving their home’s designs. 

The As Built Certification is mandatory and certifies that the house is sustainable and that the household has the means to live sustainably.


Benefits of a Green Home


A green and sustainable home does not only benefit the family that dwells in it. It also helps the community and the environment.

Heating, air conditioning, and ventilation contribute to 40% of energy usage in a household. A well-ventilated and well-insulated home can therefore help lessen the energy costs and usage of a house. In addition, homes with solar systems can enjoy savings on their electric bills. 

Spending therefore on an energy-efficient home can save money in the long run than paying bigger bills for energy costs. Plus, it helps lessen the household’s dependency on the power supplied by the grid, lowering its carbon footprint.

A well-ventilated home means it has healthy indoor air quality, which is good for the well-being of the household. Green and sustainable homes also use fewer toxic substances, making them more beneficial for the family.

Sustainable homes also incorporate efficient plumbing and high-efficiency appliances, saving on water usage. In turn, the household gets to save on water bills.

Green homes have higher resale value than regular structures, making them a worthy investment, aside also from the fact that they are the more responsible choice.


Looking for a Green Home Loan? Let FinHub Solutions Help You.


Applying for a green home loan can be rigorous, especially with all the requirements. FinHub Solutions will help you look for the perfect green home loan to match your sustainable project. Whether you are looking to finance a new home purchase, new home build, or a home renovation, we have the resources to help you secure the right financing product for you. Call us today on 02 8935 9483 or email contact@finhubsolutions.com.au for enquiries.

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