With the movement toward green home upgrades, people are becoming more and more ethically and eco-minded when it comes to the environment. However, those who want to pursue these upgrades rarely have the funds necessary to completely renovate their homes with green ideas in mind. The government has provided many with the opportunities to get loans for making those green changes to a home. These green home loans are exactly what many people need to transform their home into an earth-friendly place and reduce their overall environmental footprint. Here is more about green home loans and their usefulness in renovations.
A Quick Definition
A green home loan works just like a normal mortgage or home loan to help individuals and families pay for their home. However, a green home loan acts as encouragement or incentive to help persuade people to make more environmentally friendly renovations to their existing home. This can include buying homes, building homes, or improving the home that is environmentally friendly in various ways. Sometimes, lenders will even offer discounted rates for interest, especially if the homes are noted as energy efficient. There are, however, certain criteria that must be met before the individual can qualify for discounted interest rates. Things like water storage tanks, solar panels, or double glazing are important since they help provide alternative power supply. Individuals should always check for eligibility requirements before applying.
Knowing How They Work
In most cases, green home loans work in the same ways as normal home loans. The individual borrows money from a certified lender to pay for the cost of buying, building, or renovating a home and property. The individual pays back the lender over a designated amount of time with a certain rate of either variable or fixed interest.
The major difference between regular home loans and green home loans is the criteria needed to be eligible for the loan type. Lenders might require the installation of solar panels or water storage tanks, among other renovations, to provide the necessary green features needed. The requirements for eligibility vary across lenders. An interesting thing about the environmentally friendly additions is the return from the lender. Many lenders will offer individuals a lower interest rate, flexible options for repayment, and even a redraw option if the individual meets the necessary criteria. Just like with normal loans, the features of the green loan is going to vary depending on the chosen lender.
The Pros and Cons
There are several pros and cons to getting a green home loan for yourself. These pros and cons might differ depending on the lender, but most will fall into these same categories. First, the negative things should be discussed.
Most of the green loans available have a strict set of criterion for the home that must be met before the individual can receive eligibility. This criterion varies among lenders according to their requirements and the features that the home has. Another negative is the fees that green home loans can incur. Individuals should always be aware of any fees like a redrawing fee to ensure they are not being overcharged.
There are many positive things about green home loans that convince people to go for them. When using a green home loan, individuals are essentially gaining the benefits of a reduced environmental footprint. This helps contribute to the sustainable future.
Another major benefit is the lower interest rates. Since many lenders will provide individuals with a lower interest rate should they install certain features to the home, this is the main draw for individuals to choose green home loans. The individual is rewarded to update their home with environmentally friendly aspects. When shifting to a green home, it is also helpful for lowering the cost of bills. Since green often means energy efficient, the individual saves money on electricity and other bills like water.
When it comes to shopping for great green home loans, all individuals and families should be aware of the eligibility requirements, the fees, and even the lender itself. It doesn’t matter whether the homeowner is looking to get a green home loan for buying a home, building a home, or even renovating a home, green home loans can be a beneficial and more efficient way to do all three.
Guest post by Tanya Mayer
About the Author
Tanya Mayer is a blogger from Brisbane, Australia. She is interested in writing on various topics relating to family, home and home improvement.
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