How do green home loans work?

As more Australians look for ways to minimise their carbon footprint, a growing number of lenders are backing them with ‘green’ loans.

Green loans, also known as sustainable loans, are loan products that can be used to finance the purchase of energy-efficient homes, the construction of energy-efficient homes and green renovations. They can also be used for things like:

Battery storage.
Double glazing.
Electric vehicles and EV charging stations.
Energy-efficient air conditioning, lighting and white goods.
Grey water treatment systems.
Home ventilation systems.
Insulation.
Inverters.
Solar panels and hot water systems.

Green home loans vs regular mortgages

The application process for a green home loan is similar to that for a regular mortgage. The key difference, though, is that green home loans may offer lower interest rates, lower fees and more flexible borrowing conditions.

That’s why, as part of the application process, you’ll need to explain what you’re planning to use the loan for and confirm that your project meets the lender’s environmental guidelines.

The benefits of green homes

Making your home more environmentally friendly carries several benefits, the most obvious ones being lower emissions, lower running costs and (generally) higher liveability.

But there are other benefits, which Domain explored in its Sustainability in Property 2024 report.

When Domain compared green property listings with non-green listings, Domain found that green homes:

Attracted more views
Sold faster
Sold for higher prices

So making your home more energy-efficient is also likely to increase its resale value.

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Licensing statement: Rayne Finance ABN [70 605 100 838] is authorised under LMG Broker Services Pty Ltd Australian Credit Licence 517192. Disclaimer: (1) As with any financial scenario there are risks involved. This information provides an overview or summary only and it should not be considered a comprehensive analysis. You should, before acting in reliance upon this information, seek independent professional lending or taxation advice as appropriate and specific to your objectives, financial circumstances or needs. This publication is provided on the terms and understanding that: (2) LMG Broker Services Pty Ltd, Rayne Finance (Seed Lending Pty Ltd) and the authors, consultants and editors are not responsible for the results of any actions taken on the basis of information in this publication, nor for any error in or omission from this publication. (3) LMG Broker Services Pty Ltd, Rayne Finance (Seed Lending Pty Ltd) and the authors, consultants and editors, expressly disclaim all and any liability and responsibility to the maximum extent permitted by the law to any person, whether a purchaser or reader of this publication or not, in respect of anything, and of the consequences of anything, done or omitted to be done by any such person in reliance, whether wholly or partially, upon the whole or any part of the contents of this publication.

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