Your guide to ‘Green Loans’
Green loans are an excellent way to finance sustainable energy solutions for your home or vehicle. These loans can help cover the cost of solar power systems, as well as energy-efficient home upgrades like advanced heating and insulation. In addition, green loans can be used for the purchase of electric or hybrid vehicles, along with the required charging infrastructure. To skip straight to the different bank comparisons scroll to the bottom of this article.
In New Zealand, most banks offer green financing through home loan top-ups, which are additional loans that add to your existing mortgage. These top-ups are specifically designed for environmentally-friendly upgrades, such as installing solar panels, improving home insulation, or replacing heating systems with energy-efficient alternatives. The terms of these loans vary by bank, but some may offer interest-free periods for up to five years, while others may have variable interest rates ranging from 0% to 8% per annum, depending on promotions or special offers for existing customers. It's important to note that to qualify for these green loans, your mortgage must be with the same bank offering the loan.
One of the biggest benefits of green loans is their lower interest rates compared to standard renovation loans. This makes them an attractive option for homeowners looking to invest in sustainability. The lower rates incentivize more people to make greener choices, which not only helps reduce their environmental impact but also leads to long-term financial savings. Over time, investing in clean energy technologies, such as solar panels, energy-efficient appliances, or electric vehicles, can significantly reduce ongoing energy costs, providing long-term value for Kiwis.
Additionally, the government offers various incentives to support the adoption of sustainable energy solutions, which can further reduce upfront costs for homeowners. By opting for green financing, not only do you contribute to a healthier planet, but you also make a smart financial decision that can lead to reduced utility bills and a more energy-efficient home.
Comparing Bank options
BNZ
With BNZ's green loans, you can borrow up to $80,000 at a 1% per annum fixed rate for three years. These funds can be used for eligible home upgrades, such as energy-efficient improvements, or for purchasing electric transport options. More info
KiwiBank
Kiwibank's sustainable energy loan is a variable-rate home loan, with terms ranging from 7 to 10 years. If you borrow more than $5,000, Kiwibank will contribute up to $2,000 towards the cost of the system—$800 at the end of the first year and $400 at the end of each of the next three years. More info
Westpac
Westpac offers a sustainable energy loan with 0% interest on loans of up to $50,000 for five years when you have a Westpac Greater Choices home loan. This loan provides the flexibility to make lump sum payments or pay off the loan earlier without incurring prepayment costs. It is available to both new and existing Westpac Choices home loan customers, with no establishment fee. More info
ANZ
The ANZ Good Energy Home Loan allows you to top up your ANZ Home Loan by up to $80,000 at a 1.00% per annum fixed rate for three years. This loan can be used to make your home and transport more energy-efficient. After the initial 3-year fixed term, you can choose to fix your rate at one of ANZ's Special fixed interest rates (if eligible) or Standard fixed rates, or let your loan move to a floating rate. Please note, this loan is not available for business purposes or new builds. More info
ASB
The ASB Better Homes Top Up offers a 1.00% per annum fixed rate for three years for up to $80,000, allowing you to borrow for home improvements or sustainable energy upgrades. To qualify, you need a minimum of 20% equity in your home. This loan can help make your home more energy-efficient with the added benefit of a competitive interest rate. More info
Green loans are a great opportunity for homeowners looking to improve their property’s energy efficiency or invest in clean energy solutions, with the added benefit of cheaper borrowing and long-term savings. If you already have a mortgage, a green loan top-up could be a straightforward way to finance these eco-friendly upgrades.