What is a green home loan, and how do I get one?

Home maintenance is expensive at the best of times. While many New Zealanders want to make eco-friendly upgrades to their homes but don’t have the funds to invest in the long-term health of their home.

As a solution, many banks and non-traditional lenders have introduced ‘green loans’ to their suite of financial products. Called ‘green home loans,’ these financing options are available to Kiwis who want to make energy-efficient or eco-friendly upgrades to their homes.

These loans encourage borrowers to invest in sustainable upgrades, such as solar panels, insulation, and heat pumps, by offering lower interest rates and better terms than traditional home loans.

Green home loans make it easier and more affordable for homeowners to make environmentally friendly improvements to their homes, reducing their carbon footprint and saving them money on energy bills.

What’s the benefit of an eco-friendly home?

There are lots of reasons to make eco-friendly updates to your home. Many green upgrades positively affect the environment and your wallet long-term.

Environmental Benefits: By making eco-friendly upgrades, you can significantly reduce your carbon footprint and help protect the environment. Energy-efficient upgrades like insulation, solar panels, and LED lighting can significantly reduce your home's energy consumption. Homes that are easier to heat and cool use less energy and produce fewer carbon emissions. A smaller carbon footprint is better for the Earth.

Lower Energy Bills: Lower energy bills offset the upfront cost of installing double glazing, insulation or heating in the long term. Many green upgrades make your home warmer and dryer and require much less heating or cooling for you to stay comfortable. Reducing your home's energy consumption will lower your monthly utility bills helping you to save money over the long term.

Increased Home Value: Making eco-friendly upgrades to your home can also increase its resale value. Old homes in New Zealand are under-insulated and many buyers are willing to pay more at purchase for a warmer home. You’ll also attract environmentally conscious buyers, which can help your home stand out in a competitive real estate market.

Improved Health: Poor quality homes are responsible for many health problems in New Zealand. Damp, mouldy, draughty homes can cause asthma, and breathing difficulties, increase your susceptibility to colds and flu and hamper your recovery time. Many eco-friendly upgrades, such as air-sealing, ventilation, and air-purifying systems, can improve the quality of the air you breathe inside your home which also helps improve overall health and well-being.

A Comfortable Home: With the increase in working from home, it's more important than ever that our homes are warm, dry, soundproof and comfortable. Every New Zealander deserves to live in a home that is warm in winter, free from draughts, damp and cold and easy to cool in summer.

From saving money on your energy bills to protecting the environment, making eco-friendly upgrades to your home is a smart investment that can benefit you and your future. Interested in a green home loan? Here’s what providers are offering:

Where to get a green home loan in New Zealand

Several banks and financial institutions in New Zealand offer green home loans, including Kiwibank, Westpac, and ANZ. Each lender has its own set of criteria and requirements, so it's important to do your research and compare options before choosing a lender.

Kiwibank

Kiwibank's "Sustainable Energy Loan" is a great option for existing Kiwibank customers and non-customers. To be eligible for the loan, borrowers must use the funds to install an eligible sustainable energy system, including:

• Solar power

• Small scale hydro

• Wind energy

• Geothermal resources.

If you borrow more than $5,000, Kiwibank will contribute up to $2,000 over four years towards the cost of the system. Existing Kiwibank customers will also have their home loan top-up fee waived.

Westpac

Westpac's "Warm Up New Zealand" loan is another popular option. This loan is designed to help homeowners pay for insulation and heating improvements, essential for keeping homes warm and dry during the colder months. The loan offers up to $40,000 and an interest-free borrowing rate for up to five years. You can use the loan for:

• Mixed insulation

• Heat pumps

• Double glazing

• Ventilation

• Wood burners

• Solar power systems and batteries

• Electric vehicle chargers

ANZ

ANZ's "Good Energy Home Loan" is a more recent addition to the market. This loan is specifically designed to help homeowners make improvements that improve the energy efficiency of their homes with a low-interest rate.

With this loan, you can borrow up to $80,000 to make energy-efficient improvements for just 1.00% interest for three years. The home loan can also be used for green transportation upgrades. Energy-efficient and green upgrades that qualify include:

• Heat pumps: fixed single-spilt or multi-split heat pump systems

• Insulation: Ceiling, floor and wall insulation

• Glazing: Double, secondary or triple window glazing

• Ventilation: Heat recovery systems or positive or balanced pressure ventilation systems

• Water Heating: Solar water heaters or heat pump water heaters

• Solar Panels: All related costs for installing solar panels

• Solar Batteries: Lithium-ion or lead-acid-based solar batteries

• Rainwater tanks: Home rainwater tanks and any related upgrades.

• Hybrid and electric vehicles: Any electric, hybrid or Plug-in hybrid from a registered motor vehicle trader.

• Electric vehicle chargers: Portable or wall-mounted electric vehicle chargers.

• Electric bikes: New or used bikes.

BNZ

BNZ’s “Green Home Loan” top-ups allow borrowers to make up to $80,000 worth of upgrades to their home, pay for electric transport, and pay just 1% interest for the first three years of the loan. The home loan can be used for upgrades that make your home warmer and more energy-efficient and for green transport options. Upgrades that qualify include:

Renewable energy: Solar panels, batteries and inverters and all installation costs

Heating and insulation: Heat pumps, water heating, insulation, window glazing, and ventilation systems.

Water tanks: Installing rainwater tanks or paying for parts such as filters and pumps.

Transport: EVs or plug-in hybrids, electric chargers and electric bikes.

If you want a warmer, dryer home, explore these low-interest options first. Moving to a new home? Make sure you take note of what energy-efficient upgrades have been done. You may be able to negotiate a better price if the home requires upgrades to its insulation, heating or ventilation. Need help with your move? Book a trusted mover here.